Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

OLD LONDON ROAD, HYTHE, BURIAL GROUND BILL

Lords Amendments agreed to.

BRITISH AIRPORTS AUTHORITY (LONG- FORD RIVER) BILL [Lords]

Read the Third time and passed, with amendments.

Oral Answers to Questions — SOCIAL SERVICES

Pensions

Mr. McCrindle: asked the Secretary of State for Social Services when she will announce her new pension proposals.

Mr. Crouch: asked the Secretary of State for Social Services what consultation she is having with the insurance industry over her new pension proposals.

Mr. Boscawen: asked the Secretary of State for Social Services whether it is the Government's intention to abolish the married women's option.

Mr. Norman Lamont: asked the Secretary of State for Social Services whether she will seek a meeting with the National Association of Pension Funds.

The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley): We shall publish a White Paper setting out the Government's pension proposals as soon as possible, and those proposals will form the basis for consultation and discussion. As far as the details of our plans are concerned, I

must ask the House to await the White Paper.

Mr. McCrindle: I thank the Minister for that reply. Can he confirm that the broad basis upon which these proposals will come forward will be that of a second pension, as suggested in the Social Security Act 1973? Can he further confirm reports that the proposals will include a better deal for women and a faster accrual rate for older people? If those assumptions are correct, can he confirm that this can be achieved only by a substantially increased rate of contribution and a degree of cross-subsidisation to those already retired?

Mr. O'Malley: I can only ask the hon. Gentleman to await the publication of the White Paper.

Mr. Marks: Before bringing in any new scheme, will the Secretary of State consult the Chancellor of the Exchequer with a view to giving tax relief on contributions to the national scheme or tax exemption for the pensions paid?

Mr. O'Malley: I am aware of these matters, which will be receiving, as they are already receiving, along with all other matters, the closest consideration.

Mr. Boscawen: While one understands why the investigation into the Government's pension scheme is taking such a long time and that it is harming many people who would otherwise, from next April, be in the second pension scheme, may I ask the Minister to confirm that he will continue with the married woman's option, from which 3 million women benefit? Does he propose to bring forward during this Parliament the Bill to increase considerably the contributions for the married woman's option without giving her any better benefits?

Mr. O'Malley: On the last question relating to Bills this Session, the House will be aware that there is already a Bill which deals with the matter the hon. Gentleman has raised. On the question of the married woman's option and our intentions in the long-term pension proposals, I must ask the hon. Gentleman also to await publication of the White Paper. When he complains that we are taking a long time to bring forward proposals, I would point out that after his Government scrapped the Crossman


proposals it took them over two years to bring forward their proposals. We shall do it much more quickly than that.

Mr. Gwilym Roberts: Does my hon. Friend accept that some of us on this side are far more anxious that the Government should not rush this matter but should produce a progressive pension scheme which will stand the test of time? Will he accept that in producing this sort of scheme he must think in terms of making proposals, which necessarily must become law, for the next 20 years and that the pension scheme should be designed to stand that sort of test?

Mr. O'Malley: This Government are moving with a speedy efficiency on pension proposals which was not characteristic of the last Government. On my hon. Friend's second question, I hope that the proposals we bring forward for consideration and consultation in the White Paper will lead to the setting up of a structure which will stand for a long time.

Mr. Kenneth Clarke: But is the Minister aware that he has already dropped enough hints, in the House, in the Press and to the pensions world, for us to know that he is contemplating the introduction of a Crossman-type scheme of big earnings-related contributions to pay for grandiose promises of earnings-related benefits in future? Is he also aware that as his party has had so much practice in preparing pension schemes over the past few years we suspect that he is toying with the idea of holding the scheme back until after an election because of the unpopularity of any such proposal with the occupational pensions industry and with all those whose savings and deferred pay are in schemes which will be threatened by what he has in mind?

Mr. O'Malley: I have not dropped hints; I have thrown bricks at the proposals of the last Government. They put forward a pension scheme which not even their friends are prepared to defend. From his attendance at meetings of his own back-bench committee on this subject, the hon. Gentleman must know the views of some of his hon. Friends on the proposals that his Government brought forward. If he likes, I can expand on that.
I have made no comments either inside or outside the House about the detailed shape of the pension proposals that we intend to bring forward. What I have said is that the levels of pensions which the hon. Gentleman's Government were bringing forward are rejected by us as utterly inadequate. We intend to bring forward proposals which will be acceptable to any fair-minded citizens of this country who want to see men and women live decently in retirement.

Foster-parents (Allowances)

Mr. Andrew Bennett: asked the Secretary of State for Social Services, in view of the wide variations in boarding-out allowances paid by local authorities to foster-parents in respect of children boarded out with them, whether she will consider compiling a set of national advisory scales.

The Under-Secretary of State for Health (Dr. David Owen): The Working Party on Fostering Practice is looking into the factors which are taken into account in determining rates of boarding-out allowance, which vary considerably. I should have its guidance by the spring and will consider its findings.

Mr. Bennett: May I first declare a minor interest as a foster-parent? Does my hon. Friend agree that there are still many children in the care of local authorities who would benefit from being boarded out with good foster-parents and that if all local authorities adopted realistic scales this would encourage many more people to become foster-parents? It is not realistic for local authority scales to range from as much as £10 per five-year-old in the North-East of England to as little as £4·70 in the North-West.

Dr. Owen: I agree that there are many children presently receiving institutional care who could go into families if there were more foster-parents. I shall do everything possible to encourage that. Inasmuch as rates of boarding-out allowances have a bearing on this matter, I shall be prepared to look at them.

Mr. R. C. Mitchell: Is my hon. Friend aware of the very wide variation among local authorities in the percentage of


children who are boarded with foster-parents and that there is some correlation between those wide variations and the variations in the boarding-out allowances paid by local authorities?

Dr. Owen: I agree that this is a factor. Rates vary, sometimes for understandable reasons such as paying a higher amount for a handicapped or disturbed child. These are factors that the House understands. Despite that, however, there is considerable variation between local authorities.

Poverty

Mr. David Steel: asked the Secretary of State for Social Services if she will now recommend setting up a Royal Commission on poverty.

Mr. O'Malley: For the reasons I gave to the hon. Member in replying to his Question of 7th May, I do not consider that any new general inquiry into poverty is required at the present time.—[Vol. 873, c. 192–3.]

Mr. Steel: Since that Question the hon. Gentleman has been kind enough to give me a Written Answer setting out some of the excellent research that is being undertaken in his Department. Does he not accept, however, that research into individual aspects of poverty is not the answer to my Question and that as a society we have still failed to tackle poverty? Is there not a case for an inquiry of an all-embracing and powerful kind?

Mr. O'Malley: I consider the hon. Gentleman's Question very sympathetically and without prejudice. But I believe that we know enough of the scope and the extent of poverty in the country at present to know that what is most important is to bring forward financial measures to relieve that poverty. That is what the Government will be doing in the coming months.
As to a detailed examination by a Royal Commission which the hon. Gentleman has suggested, the situation could arise that Governments again could have to wait for the report of a Royal Commission before legislating, and there is need for urgent legislation on pensions and child poverty for example. I think that it is more useful to do that in the near future rather than to be embarking on another detailed survey.

Mr. William Hamilton: Does not my hon. Friend agree that an immediate short-term solution to this problem would be an increase in the family allowance, and particularly the introduction of an allowance for the first child?

Mr. O'Malley: I understand very well the point raised by my hon. Friend. These are matters which the Government will examine as resources become available. On the part of the question relating to the first child, my hon. Friend will know that we have a manifesto commitment to introduce a family endowment system, including payment for the first child. This matter, with all our other manifesto commitments, is at present being considered by the Government. The present Government, as my hon. Friend will know, keep their manifesto promises.

Sir G. Howe: Will the Minister give the House an assurance that the Government have now repented of their dilatoriness about the tax credit scheme and will proceed to implement a scheme based upon the tax credit idea, which would be the most effective way of relieving poverty and has already been devised and considered by the House?

Mr. O'Malley: I have already explained to the right hon. and learned Gentleman at previous Question Times that we have rejected the tax credit scheme put forward by the previous administration. I ask him to await the policy proposals which will be put forward by the Government. He can then judge, as the nation will judge, how effective our total antipoverty strategy is.

Battered Babies

Mrs. Knight: asked the Secretary of State for Social Services what further action she is taking to deal with the battered baby problem.

The Secretary of State for Social Services (Mrs. Barbara Castle): Following a multi-disciplinary conference which we held last month to discuss problems of early diagnosis and of management, we are studying further ways of increasing awareness of the problem, helping professional workers concerned with it and promoting co-operation between them. We are paying particular attention to methods of obtaining and recording information, and its use. I very much


welcome the inter-disciplinary seminars and conferences that are being held throughout the country, in a number of which professional advisers from my Department have participated. A grant has been made of £112,000 over three years to the NSPCC for development of special units and for research, and discussions are at an advanced stage on a number of other research proposals in this field. I have asked directors of social services to report to me by the end of the year progress made on the setting up of inter-disciplinary area review teams and on the handling of the programme in the areas.

Mrs. Knight: Will the right hon. Lady bear in mind that action by the end of the year is not quick enough for many people in the House? Will she consider the possibility of doing something to enable doctors to safeguard their very young patients instead of, as at present, sending them back to their homes, where they may be battered, because doctors do not have sufficient powers to ensure always that they go to a place of safety?

Mrs. Castle: I am sure that the hon. Lady has misunderstood the very detailed reply I gave her on what I agree with her is a very important and urgent matter. I was not talking about waiting for action until the end of the year. I said that I have asked the authorities to let me have by the end of the year a report of the action which they had already taken to set up these area review teams. It is the purpose of these teams to make absolutely sure that a child does not fall between the net because it passes from the doctor to no particular area of responsibility. I think that the answer to the hon. Lady's point is that the doctor should be part of this multidisciplinary teamwork.

Mr. Moonman: We on the Government side of the House understand my right hon. Friend's statement. It is very warm and compassionate and we welcome it. I have two questions for my right hon. Friend. First, in relation to the Select Committee proposed on the subject of battered wives, will there be a special sector dealing with battered babies? Second, in view of the Max Piazzani case, with which my right hon. Friend is acquainted, could not a model emerge from this which would show the

nature of the way in which the Department acts immediately following an indication that there has been a serious case?

Mrs. Castle: I do not immediately see the desirability of extending the Select Committee on battered wives to this area, although if links were established between the two issues it would be possible to consider doing that. We must see how this Select Committee progresses. I shall certainly bear in mind the point made by my hon. Friend about the Piazzani case.

Public Expenditure

Mrs. Renée Short: asked the Secretary of State for Social Services what plans she has in relation to restoring the cuts on her Department's expenditure imposed by the previous Government.

Mrs. Castle: As the House will know, the Government have given priority to increased expenditure on pensions, food subsidies and housing. We have been unable at the same time to restore the reductions made by the previous Government in the expenditure planned in 1974–75. However, I announced last week that I shall be seeking Supplementary Estimates in order to make an additional £40 million of current expenditure available to health authorities in England to meet price rises and to cover a more up-to-date assessment of the level of spending on former local authority health services. Supplementary Estimates totalling £50 million in respect of pay awards have already been presented.

Mrs. Short: I thank my right hon. Friend for that reply. May I assure her that on these benches at least we were delighted to hear that she was able to find £40 million to replace some of the savage cuts inflicted on her Department by the former Chancellor of the Exchequer? The sum of £111 million was cut from her Department. Is my right hon. Friend aware that the Expenditure Committee is now investigating the effect of those cuts on hospital services and on local authority services and that we are quite appalled by the evidence of the damage done by the previous administration? Is my right hon. Friend further aware—

Mr. Speaker: Order. That is enough.

Mrs. Castle: I am grateful to my hon. Friend for what she has already managed to say.

Mrs. Short: I have not said it all yet.

Mrs. Castle: I agree with my hon. Friend that it is of great importance to the National Health Service that the Government have been able to prove by the allocation of the £40 million that they have no intention of allowing any reduction in the services due to the process of inflation and other difficulties that have been causing such anxiety. I share my hon. Friend's desire to be able to restore the expenditure cuts which I inherited from the previous administration, and the Government as a whole are anxious to do that.

Sir G. Howe: Will the right hon. Lady confirm that, contrary to what her hon. Friend the Member for Wolverhampton, North-East (Mrs. Short) appears to understand, the full £40 million made available last week is directed solely to compensating health authorities for the effect of rising prices? Will she also accept that, far from her Government having inherited savage cuts at the hands of the last administration, during the period of the last administration capital expenditure on the National Health Service was running in each year 30 per cent. in real terms above what it was at the time of the previous Labour Government, that revenue expenditure in each year during the time of the last administration was running at 15 per cent. in real terms above the level during the previous Labour Government and that she inherited a substantially improved health service with higher general spending programmes?

Mrs. Castle: The right hon. and learned Gentleman is perfectly aware that there has been upward progression over the years and that in December last that upward progression was levelled off by the cuts that were then made. He must be aware that those cuts have caused widespread anxiety among those who are having to run not only hospital services but personal social services also affected by the cuts. Case after case is coming to me from both sides of the House on this matter. That is why I consider that it is urgent for us to restore the cuts as soon as possible.

Medical Profession (Meeting)

Mr. Ancram: asked the Secretary of State for Social Services what further plans she has, if any, for meeting representatives from branches of the medical profession.

Mrs. Castle: My Department is constantly in touch with the medical profession on a wide range of matters. and I am myself available when necessary. The Prime Minister has told the British Medical Association that I will be glad to resume discussions with it about the future development of pay arrangements after the ending of statutory controls.

Mr. Ancram: I thank the right hon. Lady for that reply. Will she withdraw the unconstructive remark she made recently about consultants playing politics. and will she realise that protest is not the prerogative of the Left and that consultants are seriously concerned with their own position within the National Health Service, which she would do well to take seriously herself?

Mrs. Castle: No, Sir, I will not withdraw that remark. Of course I am aware of consultants' concern. That is why within weeks I responded constructively to their request for a joint working party to be set up under the chairmanship of my hon. Friend to examine consultants' contracts and their difficulties.
My remark was made in the context of the fact that I was aware that health authorities and the health service had been plagued by four things. The first was the lowerst-ever morale, due to the pay policy of the previous Government which kept pay down. The second was the December cuts. The third was reorganisation and the fourth was the effect of price increases. When the previous Government did this damage to the National Health Service, however, there was not a word of protest. As soon as we came into office and tried—slowly, I admit, and we have by no means yet succeeded entirely—to rectify the situation by a pay review, an inquiry and a promise to pay increases, as well as the £40 million which is to be made available to health authorities, all that the BMA could do was jeer. I call that playing politics.

Mr. Carter-Jones: May I be assured that the first question which my right hon. Friend puts to the medical authorities will be why they laughed at her extra £40 million when they did nothing about the £111 million cut?

Mrs. Castle: That has been puzzling me as well.

Mr. Raison: Is the right hon. Lady aware that since she took office there has been a tragic deterioration in relations in the health service? Will she once more repeat that the £40 million has absolutely nothing to do with restoring cuts made last December? Will she acknowledge that the tone of her answer to my hon. Friend the Member for Berwick and East Lothian (Mr. Ancram) just now indicates why relations are becoming so bad?

Mrs. Castle: No, Sir. I do not accept a single word of what the hon. Gentleman says. As soon as I took over this job I was told by all concerned that the morale of the National Health Service had never been at such a low ebb. There have been years of pent-up frustration and bitterness among nurses, radiographers, medical laboratory technicians. physical measurement technicians and a whole range of workers who have since been showing such disquiet and unrest. This arises completely and directly from the pay policy of the previous Government. The first step we took was to reverse that policy not only generally but also in its effect on the groups I have mentioned.
Therefore, surely the most important point is that while some people try to talk about the collapse of the National Health Service the Government have stepped in without delay to produce £40 million for England alone to alleviate the effects of price increases—[Interruption.] I have made it perfectly clear what this move is all about. I am glad that the Opposition are so ashamed of their own December cuts—

Mr. Speaker: Order. I remind the House that this is not debating time; it is Question Time.

Mrs. Castle: It is also—

Mr. Speaker: What I said applies to both sides of the House.

Mrs. Castle: It is also important for the House and all those who want to restore morale in the National Health Service to realise that when the pay increases are delivered to the nurses and others the extra money will be found to meet those increases. The Government have made this clear.

Disabled Persons (Sharp Report)

Mr. Marten: asked the Secretary of State for Social Services if she is now in a position to make a statement on her proposals on the Sharp Report.

The Under-Secretary of State for Health and Social Security (Mr. Alfred Morris): As the hon. Member knows, the Government are now considering the views of a wide range of interested organisations on the recommendations in the report. I recognise the concern over this matter and will make an announcement as soon as possible.

Mr. Marten: Can the Minister say when the consultations with the outside bodies will be concluded and when he estimates that he is likely to make a statement? Will it be before we rise for the recess, and shall we get a chance to debate the Government's findings before they arrive at a conclusion?

Mr. Morris: I am most grateful to the hon. Member for conveying his personal views on the recommendations in the report. It is difficult to say exactly when we shall be in a position to announce conclusions on our consultations with a wide range of organisations. I shall do so at the earliest possible date with the point made by the hon. Member very much in mind.

Mr. Ioan Evans: Does my hon. Friend recognise that the needs of the disabled passenger as well as those of the disabled driver should be borne in mind? They should be dealt with identically in the review, because these people are having difficulty getting about since they cannot use public transport.

Mr. Morris: I am grateful to my hon. Friend for his observations. There are problems not only of methods and aims but of priority as between the disabled driver and the disabled passenger. I shall certainly bear very much in mind the point made by my hon. Friend.

Community Health Councils

Mr. Beith: asked the Secretary of State for Social Services whether she will make provision for the funds of community health councils to be allocated directly to them and not drawn from the allocations of regional health authorities.

Dr. Owen: No, Sir. The National Health Service (Community Health Councils) Regulations 1973 lay this responsibility, on the "establishing authority" which in England is the regional health authority. I will of course consider carefully the views of community health councils in the light of experience.

Mr. Beith: In doing so will the Minister recognise that the community health councils are about the only voice patients have in the bureaucratic system which was bequeathed to him—without our support—and that if they have to compete for their finances with the clinical requirements for which regional health authorities are trying to cater they will be in an even weaker position?

Dr. Owen: I agree with the hon. Member, and we share the belief that the community health councils play an important part in the health service. That is why we published proposals for consultation on democracy in the health service to strengthen these councils and why I shall be listening carefully to the views of the councils as they develop.

Dorset Area Health Authority

Mr. Evelyn King: asked the Secretary of State for Social Services if she will undertake to make available in the autumn more money to cover the shortfall in health expenditure in the Dorset Area Health Authority amounting to £750,000 or if, in the alternative, she will make a recommendation as to which of the services should be withdrawn.

Dr. Owen: This is a matter for the Wessex Regional Health Authority in the light of the funds available to it.

Mr. King: Does the Minister accept that all possible economies, including even the stopping of maintenance of hospitals, have already been effected and that no further economies are possible? What share of the global sum will come

to Dorset, and will the Minister have some part in taking what must be a very difficult decision?

Dr. Owen: The announcement by my right hon. Friend about the extra £40 million was made to the regional health authority chairmen. I can assure the House that the chairmen considered it to be a major step towards restoring the shortfall, and of course the Wessex Regional Health Authority chairman was at the meeting.

Kingswood (Departmental Facilities)

Mr. Terry Walker: asked the Secretary of State for Social Services if she will consider resiting an office of the Department of Health and Social Security in the Kingswood constituency, a service which was withdrawn by the previous Government.

The Under-Secretary of State for Health and Social Security (Mr. Robert C. Brown): An adequate service over the full range of social security benefits for people in the Kingswood area is provided from the office at Fishponds Road, Bristol.

Mr. Walker: To get to the office in Bristol involves people in making two and sometimes three changes of buses, and since many of those who have to go there are sick or elderly they are presented with a considerable problem. Will my hon. Friend look at the position again? If the office in Kingswood could be opened for even a couple of half-days a week, this would help many of my constituents.

Mr. Brown: Since the Fishponds Road office was established the Department has received no reports of particular difficulties being experienced by those who live within the area it serves. Part-time offices are extremely costly in terms of manpower and overheads, and they are established only in areas remote from a parent office where there is clear evidence of need for such a service. That is not the case at Kingswood. However, the Department maintains a close watch on the needs of an area served by a local office and if it becomes evident that the service at Kingswood should be reviewed this will be given due consideration.

Nurses and Ancillary Staff (Recruitment)

Mr. Molloy: asked the Secretary of State for Social Services if she will make a statement about recruitment of nurses and ancillary staff in the National Health Service.

Dr. Owen: The total number, in whole-time equivalent terms, of nursing and midwifery staff in the National Health Service in England rose from 286,000 to 291,000 in the year ended 30th September 1973, the latest date for which figures are available. In the same period there was a small reduction in the numbers of ancillary staff from 164,000 to 163,000.

Mr. Molloy: Notwithstanding the existing low state of morale, especially in this vital element of the health service, and notwithstanding the inquiries which Lord Halsbury is conducting, it is vital that nurses and ancillary staff should be given fresh hope after the damage caused to their aspirations by the previous administration. Will my hon. Friend consider in consultation with the Secretary of State, meeting representatives of all the staff associations to see whether the general form of negotiation can be considerably streamlined to avoid the cumbersome methods which already exist?

Dr. Owen: We have already expressed our readiness to look at the whole Whitley negotiating machinery, but the approach here must essentially be one of agreement between staff and management sides. I share my hon. Friend's concern that there is room for improvement. On the question of the morale of staff, particularly in the case of the nurses, the Government on taking office talked to staff representatives and it was in response to their request that we established an independent inquiry. I hope that the result of that inquiry will be not only improved recruiting but improved morale.

Mrs. Knight: Does the Minister take as lightly as it would seem the reduction in ancillary staff numbers in some hospitals? In the Birmingham area in particular, radiographers are in such short supply that three are having to do the work of eight or nine. This is not a matter which can be regarded lightly.

Dr. Owen: Radiographers are a profession supplementary to medicine. One of the reasons for the fall in the numbers of ancillary workers in recent years has been the installation of incentive bonus schemes which involve to some extent the reduction of staff numbers.

Mr. Raphael Tuck: Is my hon. Friend aware that unless something is done about phasing local weighting allowances for nurses, we shall be losing nurses and not recruiting them? In the Peace Memorial Hospital at Watford nurses do not get a local weighting allowance whereas staff in the town hall 50 yards away get an allowance. Will my hon. Friend do his best to redress these anomalies?

Dr. Owen: As my hon. Friend knows, the report on London weighting has been published—

Mr. Tuck: There is nothing in it about a local weighting for Watford.

Dr. Owen: I regret that my hon. Friend's constituency does not seem to derive any benefit, but this is a difficult subject and is a matter of close relationship between the negotiations on London weighting for local government and the National Health Service.

Disregards

Mr. Dempsey: asked the Secretary of State for Social Services if she will take steps to increase the Supplementary Benefits Commission's disregard of £2 from weekly earned income; and if she will make a statement.

Mr. Robert C. Brown: It is our intention to review the disregard of earnings, together with the other disregards in the supplementary benefit scheme, as soon as financial and manpower considerations allow.

Mr. Dempsey: Is my hon. Friend aware that a housewife reported to me that she had accepted a job at £18 a week but was shocked to discover that her husband's supplementary benefit was reduced by £16? She was therefore working for only £2 a week. Since this matter is urgent and we are anxious to encourage eligible housewives to accept employment, will not my hon. Friend give a date when this miserable disregard will be increased to a more reasonable level?

Mr. Brown: I can assure my hon. Friend that we are well aware of the need for increasing the disregard, but the most important thing in the prevailing economic circumstances when we took office was to assist pensioners and others on supplementary benefit, and I am pleased that from next Monday pensioners and others in receipt of benefit will be getting the biggest-ever increase in the history of the pension scheme.

Mr. Marten: Could there be an interim increase fairly quickly in the disregards for one-parent families?

Mr. Brown: We are considering that.

Mr. Hooley: The figure of £2 was fixed years ago and is totally ridiculous in present circumstances. Does my hon. Friend accept that the whole system of disregards within the supplementary benefit arrangements are a savage disincentive to anybody to help themselves in any way?

Mr. Brown: I do not deny for one moment that the value of disregards has fallen by approximately 43 per cent. since they were introduced by a Labour Government in 1966. Within the financial constraints that are upon us we are anxious to improve them.

Strikers' Families (Benefit)

Mr. Dixon: asked the Secretary of State for Social Services how much has been paid in supplementary benefits to strikers' families in each of the last three years.

Mr. O'Malley: The approximate figures are £4·3 million in 1971, £8·4 million in 1972 and £0·7 million in 1973.

Mr. Dixon: Now that the hon. Gentleman is in government himself, will he take us into his confidence and give us some indication of the difficulties which he and his colleagues anticipate having in governing the country during the next six months, bearing in mind that taxpayers are potentially subsidising large numbers of their fellow citizens who are holding the country to ransom?

Mr. O'Malley: To the extent that the country became ungovernable, that took place during the last months of the last Tory Government. To the extent that there has been an improvement, that

has been the result of the policies of the present administration. If the hon. Gentleman has any complaints to make about the level of the figures which I have given, he should remember that the figures are the direct result of Tory industrial relations policies. The figures are nearly 14 times higher for the three years that I have mentioned than those for the three full years of a Labour administration between 1967 and 1969. In that period the total cost under Labour was about £1·4 million. For the three full years of a Tory Government it was about £14 million. That figure reflects the success of Tory policies.

Mr. Molloy: Does my hon. Friend agree that instead of dealing with the spiteful trivia raised by the hon. Member for Truro (Mr. Dixon) it is much better to consider what any successful Government should do, and what the present Government are doing—namely, keeping the work-force healthy and creating industrial harmony so that we do not have the sort of strikes which ultimately led to the three-day week, which nearly paralysed the nation? To raise social questions of this nature on the Floor of the House is reprehensible in the context of the manner in which the previous Government administered.

Mr. O'Malley: Of course my hon. Friend is right. Conservative Members who persist in following this subject at Question Time should remember that what they are criticising is not Labour Government legislation but the Social Security Act 1971, which was introduced by the last Conservative Government. As these criticisms are being made of the activities of the previous Government, it will be interesting to know whether the present Conservative Front Bench is disavowing the policies followed by the previous Tory administration in 1971 and whether it is now prepared to assume even more vicious policies towards men on strike.

Mr. Bruce-Gardyne: Will the Minister explain how it came about that he told the House about a month ago that the total cost of the strike subsidy this year had run to £4 million when the cost of the strike subsidy in the Ulster situation alone amounted to £5 million? Further, will he explain what legislative authority there was from this House for the payment of £5 million in Northern Ireland


in what I believe even the Labour Party regards as a political strike?

Mr. O'Malley: I think it is right that the hon. Gentleman should spotlight the expenditure of £4·4 million so far this year. That spotlights the miners' strike which was caused by the policies of the previous administration. The Northern Ireland situation is a question for my right hon. Friend the Secretary of State for Northern Ireland.

Breast Cancer Screening

Mr. Joyce Butler: asked the Secretary of State for Social Services how many well-woman and other clinics are now screening women for breast cancer; and what progress is being made in research to provide an adequate breast-cancer screening programme for all women at risk.

Dr. Owen: Examination of women for breast cancer is widely available from general practitioners and in hospitals and clinics run by area health authorities.
On the advice of the Joint Working Group on Breast Cancer Screening, the Health Departments for England, Scotland and Wales are financing four research projects on breast cancer screening, but they will take some time to complete.

Mrs. Butler: As so many women still die of this disease and as many others live in dread of it, whereas a dramatic decrease of 33 per cent. in the mortality rate of the over-50s has been shown by a recent study in America, will my hon. Friend keep up the pressure on his Department to ensure that it gives adequate priority to the helpful advances in early detection and early treatment?

Dr. Owen: We are aware of the work that has been done in America, and particularly in New York. My hon. Friend is right; 17,759 new cases of breast cancer were identified in 1969. This is a major public health problem. This Government will put resources into preventive medicine.

Oral Answers to Questions — PUBLIC OWNERSHIP AND INFLATION (MINISTER'S SPEECH)

Mr. Bruce-Gardyne: asked the Prime Minister whether the public speech by the Chancellor of the Duchy of Lan-

caster at a conference organised in London by the Financial Times on 27th June on Government policy towards ownership and inflation, represented the views of Her Majesty's Government.

The Prime Minister (Mr. Harold Wilson): Yes, Sir.

Mr. Bruce-Gardyne: The Chancellor of the Duchy of Lancaster told us in the course of his speech that the Government are determined to avoid the alternatives of a state of slump and hyperinflation and that they will pursue what was described as a "more constructive alternative". However, as The Financial Times pointed out, the right hon. Gentleman did not describe the nature of that constructive alternative. Will the Prime Minister enlighten us?

The Prime Minister: I think that it would have been wrong of my right hon. Friend, as it would be wrong of me today, to anticipate the statement of my right hon. Friend the Chancellor of the Exchequer next week.

Mr. Jeffrey Archer: Will the right hon. Gentleman confirm that his right hon. Friend the Chancellor of the Duchy of Lancaster was actually there to make the speech and that it was not read for him by the Government Chief Whip?

Oral Answers to Questions — PORTUGAL

Mr. Ioan Evans: asked the Prime Minister whether he will make a statement on his recent meeting with the Prime Minister and Foreign Secretary of Portugal.

The Prime Minister: My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs and I met the then Prime Minister and the Foreign Secretary of Portugal at Brussels on 25th June. We discussed the problems which the Portuguese Government faced at that time and other topics of common interest.

Mr. Evans: After over 40 years of Fascism there are bound to be difficulties in re-establishing democracy in Portugal. What will our Government do to erase the fact that recently the previous Government entertained a Fascist leader in London? In his discussions with Dr. Mario Soares, the Socialist leader, did


my right hon. Friend discuss what we can do as a nation to help Portugal solve its problems, and particularly to ensure that the new-won freedom of the people of Portugal is extended to the people of the African territories of Mozambique, Angola and Guinea-Bissau?

The Prime Minister: We discussed these matters at some length. They are of great importance to this country. With regard to the earlier part of my hon. Friend's question, there was a debate in the last Parliament when we opposed a visit by Dr. Caetano to the United Kingdom. What we then said was 100 per cent. justified by the evidence in Wiriyamu, despite the attitude of the then Conservative Government. Since that time Dr. Caetano has, happily, disappeared.

Mr. Hurd: Did the right hon. Gentleman discuss with the Portuguese leaders the winding-up of the Beira patrol?

The Prime Minister: No, there is no question of the winding-up of the Beira patrol. What we discussed with them, as they are matters of which this country has had great experience over a succession of Governments, were some of the problems that arise when an imperial Power begins to concede self-government to territories which it previously administered. We stressed on the Portuguese Government the very great importance which has been accorded by successive Governments in this country not only to having a vote on self-determination but to leaving behind something constructive for the protection of minorities.

Mr. David Steel: Have the Government discussed with the Portuguese authorities any possibility of giving aid to the economy of Lourenco Marques if sanctions against Rhodesia were to be made more effective by a new regime in Mozambique?

The Prime Minister: The discussions which we had with the then Prime Minister and with Dr. Soares related to the present situation. They told us that they are trying to set up a fully democratic situation in Portugal and in the African territories. It is too early for us to start to speculate about the effect that that might have on sanctions in relation to Rhodesia.

Oral Answers to Questions — NORTH ATLANTIC ALLIANCE

Mr. Blaker: asked the Prime Minister if he will make a statement about the results of the recent meeting of Heads of State of the member countries of the North Atlantic Alliance.

The Prime Minister: I would refer the hon. Member to the reply which I gave to my hon. Friend the Member for Salford, East (Mr. Allaun) on 27th June.—[Vol. 875, c. 515.]

Mr. Blaker: Will the Prime Minister find some means of giving greater publicity to the Atlantic Declaration which he and his colleagues signed on that occasion and which paid tribute to the effectiveness of our own nuclear deterrent, describing it as capable of playing a deterrent rôle of its own, and which also said that the determination of the member countries of the EEC to proceed towards greater unity would contribute to the common defence?

The Prime Minister: On the nuclear question, we are neither overstating nor understating the true position, which has been frequently debated in the House. There was some discussion on the drafting of the declaration in Ottawa, and on the question of Europe it was made clear that the declaration did not mean that Her Majesty's Government were accepting the humiliating terms that right hon. and hon. Gentlemen on the Opposition benches had accepted.

Mr. Stonehouse: In view of the deterioration of the situation in Cyprus, what action does the Prime Minister intend to take within NATO—or elsewhere—to avoid the outbreak of hostilities between two member States of NATO, namely Greece and Turkey?

The Prime Minister: My right hon. Friend has draw attention to the anxious aspect of what has happened in Cyprus in the last 24 hours. I am not sure that the right forum for dealing with these matters—including our own duties as one of the guarantors of the 1960 treaty establishing Cyprus—is NATO, but my right hon. Friend the Foreign and Commonwealth Secretary hopes, with permission, to make a statement after Question Time.

Oral Answers to Questions — ECONOMIC AFFAIRS (PRIME MINISTER'S SPEECH)

Mr. William Hamilton: asked the Prime Minister if he will place in the Library a copy of the Press release of his speech on economic matters he made to international Socialist leaders on Sunday 30th June.

Mr. George Gardiner: asked the Prime Minister if he will place in the Library a copy of the Press release of his speech on economic affairs to the Socialist International Conference at Chequers on 30th June.

Mr. Nigel Lawson: asked the Prime Minister if he will place in the Library a copy of the Press release of his speech on the economic situation to the Socialist International at Chequers on 30th June.

The Prime Minister: I did so on the following day, Sir.

Mr. Hamilton: Will my right hon. Friend take this opportunity of reaffirming his firm belief in the need for the maximum amount of co-operation among Socialist leaders internationally and especially in Western Europe? That being so, will he use every endeavour to maintain our membership of the Common Market? In particular, will he say what are the prospects for international cooperation in the purchase of oil from the Middle East?

The Prime Minister: My speech, which is the subject of the Questions, rated substantially to the effect of the oil problems on all countries, including developing as well as developed countries, and also to the problem of oil money circulating round the world. Some of the warnings I gave have since been emphasised.
This was not in my speech, but one of the five items which we spent the day discussing related to Europe, and various statements were made on the European situation and positions were stated. I have nothing to add to what my right hon. Friend the Foreign and Commonwealth Secretary said in a recent debate in the House on the European question.
With regard to co-operation in the matter of oil purchase prices and finance, this is, rightly, being done partly by

countries bilaterally with the oil producers and partly on a world-wide scale. I set out on behalf of the Government some considerations which we should like to see followed in the world handling of oil and the oil monetary situation.

Mr. Gardiner: As in that speech the Prime Minister said that confidence demanded that a clear frontier be defined between what is public industry and what is private industry, will he say whether he intends to define that frontier clearly in the coming White Paper, and. if so, when?

The Prime Minister: That, of course, is what the White Paper is about. We shall have a definitive statement. I cannot forecast exactly when it will be ready. We are working hard on it.

Mr. Skinner: In his talks with the Socialist leaders, did my right hon. Friend indicate to them that one reason why the British people are very much against Britain's continued membership of the Common Market is that the so-called economies of scale, about which we heard so much during the term of the previous Government, in the first few months have resulted in a £2,000 million trading deficit with the rest of the Common Market countries? If my right hon. Friend has not already done so, will he tell the Socialist leaders that within the Labour Party there will be a massive campaign to urge the British people to vote "No" when they get the chance to do so in a referendum?

The Prime Minister: I have nothing to add to or to subtract from the figures which were given in the House yesterday by my right hon. Friend the Secretary of State for Trade. The argument about economies of scale has validity provided that the nation is not crippled by the acceptance of some of the other terms. It was always recognised that economies of scale would take some little time to develop. We have made clear that when the negotiations are complete we shall put them to the British people for a decision by the ballot box.

Mr. Lawson: As the Prime Minister is afraid to allow the House an opportunity this Session to debate the White Paper to which my hon. Friend the Member for Reigate (Mr. Gardiner) referred, will he at least assure the House that the


frontier he has in mind is neither like that of the Third Reich, namely constantly expanding, nor like that between Soviet Russia and the satellite States in which it makes very little difference which side of the frontier one happens to be?

The Prime Minister: I am certainly not afraid of having the White Paper debated in the House.

Mr. Tebbit: In this Session?

The Prime Minister: One advantage will be to show how utterly ridiculous have been the campaigns of Opposition Front Benchers and Opposition back benchers in the feverish and fevered remarks they have made. I admire the ingenuity—

Mr. Tebbit: In this Session?

The Prime Minister: I admire the ingenuity—in this Session—of the last part of the supplementary question. I will study what the hon. Gentleman has in mind. I found it more inscrutable than I found his rather distinguished contributions when he was a City editor.

Mr. Faulds: Did the Prime Minister regale the Socialist leaders with the relevance of the Palestinian problem and the contribution that the Arab Socialist leaders might make to world economic problems?

The Prime Minister: The point of view of the Palestinians and Middle Eastern questions were discussed. The Prime Minister of Israel was there. The Chancellor of Austria reported on his tour of the Middle East and particularly on the views expressed by Syria and Egypt. The Prime Minister of Malta was there. My hon. Friend may therefore be satisfied that all possible angles of Middle Eastern questions, including the vitally important question of the Palestinians, were discussed.

Mr. Faulds: Were any Arab Socialist leaders there?

Mr. Thorpe: Was the Prime Minister able to discover how many other Socialist Foreign Secretaries have monitoring committees to supervise their activities?

The Prime Minister: Ours has not.

Oral Answers to Questions — MENTALLY HANDICAPPED PERSONS

Mr. Moonman: asked the Prime Minister if he will give consideration to recommending a Royal Commission on community care for the mentally sick and handicapped.

The Prime Minister: No, Sir. The need now is for effective action in this field rather than a further inquiry. My right hon. Friend the Secretary of State for Social Services has already announced that she will be making a statement as soon as possible on the Government's policy for the mentally handicapped and also that we intend to publish a White Paper setting out our overall strategy for the development of a comprehensive pattern of health and social services for the mentally ill.

Mr. Moonman: I thank my right hon. Friend for that statement and for the remarks of his right hon. Friend. Will he reconsider the need for a Royal Commission which would take into account the variations in services which exist between one part of the country and another, evidence of which was given in the Questions which 30 hon. Members put on the Order Paper?

The Prime Minister: My hon. Friend has an important point here, but I do not think that a Royal Commission would help as so many of the facts are known. The problems between one part of the country and another, and indeed over the country as a whole, are related to money and priorities. We are still operating against the background of the severe cut made on 17th December by the Conservative Chancellor of the Exchequer. Many local authorities to my knowledge—and others will agree from their constituency experience—want to do more in many aspects of health and welfare services and are prevented from doing so by lack of money. I do not think that a Royal Commission would help.

Mr. Burden: Will the right hon. Gentleman ask his right hon. Friend the Secretary of State for Social Services to pay particular attention to the situation of mentally handicapped children and their schooling? In addition—and I am sure


that the right hon. Lady will agree—is it not essential to consider the provision of custom-built schools for these children, who at present are inadequately served?

The Prime Minister: My right hon. Friend the Secretary of State for Social Services notes what the hon. Gentleman said, although it has been the practice under successive Governments for this subject in the main to be dealt with by my right hon. Friend the Secretary of State for Education and Science. Many right hon. and hon. Members in all parts of the House, including myself, have taken an interest in the subject of mentally handicapped children both in our constituencies and elsewhere. We all know that the problems are extremely difficult. It is a question of priorities. I agree that purpose-built and equipped schools, and also establishments for those who have just left school, are vitally important in this respect.

CYPRUS

The Secretary of State for Foreign and Commonwealth Affairs (Mr. James Callaghan): With your permission, Mr. Speaker, and that of the House, I will make a further statement about the situation in Cyprus.
The House will be greatly relieved to learn that President Makarios is alive. [HON. MEMBERS: "Hear. hear."] He has requested that he should be allowed to enter the sovereign base areas, and Her Majesty's Government have agreed to this request. It appears that the National Guard is at present in control of parts of the island and that fighting continues among the Greek Cypriot population, although the Turkish population is not at present involved. The situation clearly contains grave risks and it is of great importance that peace be restored as soon as possible.
In Athens our Ambassador has conveyed to the Greek authorities my view that Greece should state unambiguously her intention to observe her international obligations in regard to Cyprus. I am glad to say that in a written statement this morning the Acting Foreign Minister is reported to have said that the policy of the Greek Government is to observe and safeguard the independence and

territorial integrity of the Cyprus Republic. He has added that the Greek Government attach major importance to the inter-communal talks between Greek and Turkish Cypriots.
Her Majesty's Ambassador is also informing the Greek Government that, in the view of Her Majesty's Government, it would do much to reduce tension in the area if the Greek officers of the Cypriot National Guard were to be replaced at the earliest possible moment.
I continue to remain in contact with the Turkish and other Governments and with the Secretary General of the United Nations.
As regards the many British holidaymakers at present in Cyprus, the Foreign and Commonwealth Office is keeping in close touch with the various travel organisations concerned in Cyprus. The travel organisations have plans for flying the tourists out of Cyprus as soon as the airport at Nicosia is open again. Alternative arrangements will be made if it remains closed.

Sir Alec Douglas-Home: The House is grateful to the right hon. Gentleman for his statement. We share his great relief that the Archbishop escaped the assassin's gun and is safe.
I have two short questions to ask about the Archbishop. Has he asked for political asylum—indeed, does the present situation amount to political asylum since he is now on British soil? Does not the Foreign Secretary agree that probably from every point of view it would be a good thing if the Archbishop were not to stay on British soil for long, although there is an obligation upon us to see that he is safe. The right hon. Gentleman might like to comment on the situation, for, as he said, it is full of risks.
There are perhaps two hopeful signs in the statement. One is that the Greek Cypriots and Turkish Cypriots are not apparently fighting each other, since apparently it is an inter-Greek quarrel. The second hopeful sign is the statement by the right hon. Gentleman that he attaches importance to inter-communal talks. One cannot be optimistic about the situation in Cyprus, but nevertheless there are hopeful signs that the situation there may shortly return to something like normality.

Mr. Callaghan: I am obliged to the right hon. Gentleman. It is not clear whether President Makarios has asked for political asylum. Messages are passing very quickly at the moment, but the fact that he has requested permission to enter the sovereign base area and that we are facilitating that request undoubtedly points in the direction of his seeking political asylum. It is right, as the right hon. Gentleman has suggested, that the Archbishop should not stay in the area, but our primary concern at present is with his safety and we shall make appropriate arrangements in conjunction with him.
With regard to the position of the Greek Government, I can only re-emphasise that we attach the utmost importance to that Government's carrying out and making tangible the statements which they have made on their attitude to Cyprus. If they do so, the cause of tension will be very much less than it appears to be at present.

Mr. Russell Johnston: I associate myself with the pleasure expressed on all sides of the House at the escape of President Makarios. Obviously, the situation is confused, but can the Foreign Secretary add anything to his statement and comment on whether the supporters of the Archbishop are in a position to fight back at present? Secondly, what is the present dispersal of forces? Can he reassure relatives and friends of people who are on holiday in Cyprus? So far there is no news of any British citizen having been harmed in the uprising.

Mr. Callaghan: No information has reached me about British holidaymakers but, as the hon. Gentleman said, the position is confused, and communications are not at their best at the moment. As for the future of the Archbishop's followers, our latest reports say that fighting is going on, but I cannot expand on that.

Mr. Wellbeloved: Will the Foreign Secretary take note of the fact that it appears that the leaders of the military coup are officers who owe their prime allegiance to Greece, a country which has seen democracy destroyed by a military dictatorship? Secondly, will he note that the so-called president of the military coup is a man who openly boasts that he took part in the murder of British Service

men in the 1960s? Will he also note that the overwhelming majority of Labour Members and the people of this country will expect the United Kingdom Government to give support and aid to the legally elected Government of the Republic of Cyprus?

Mr. Callaghan: I am sure what my hon. Friend said expresses the views of a great many people, and certainly they are not out of harmony with the direction in which my own statements and actions have pointed so far.

Mr. Churchill: Since the maintenance of the independence of the Republic of Cyprus is of great importance to this country, and as there would be grave dangers in any outside intervention, particularly by other NATO Powers, what consultations has the right hon. Gentleman had—or what discussions is he about to have—with other allies in NATO to dissuade the Greek Government or any other Government from direct military intervention in the event of hostilities in the island continuing for a prolonged period?

Mr. Callaghan: The hon. Gentleman may be assured that we are in full communication with our allies in NATO, as well as with the Governments immediately concerned.

Mr. Stonehouse: Do the Government recognise that Archbishop Makarios is the legitimate Head of State? Secondly, what reply has been given to the request from the Turkish Prime Minister for Britain to intervene with Turkey to protect the treaty of guarantee?

Mr. Callaghan: On the first part of the supplementary question, President Makarios was elected, and is now the elected, leader of the people of Cyprus. So far as I know, he has not yet laid down his office. On the second part of my right hon. Friend's remarks, I am afraid I have not been informed of any direct request by the Turkish Prime Minister. My right hon. Friend seems to be better informed than I am, but I repeat that I have not yet seen such a request. We are both in consultation through our ambassadors, and action is being taken in parallel with each other.

Major-General d'Avigdor-Goldsmid: Does the Foreign Secretary agree that


the tragic events of the last 48 hours underline the importance of the presence of British forces in the island? I hope that this matter will be taken into consideration in the forthcoming Defence White Paper.

Mr. Callaghan: I think that is a bit of a non sequitur since the forces which at the moment stand between the two communities are the United Nations forces.

Mr. Hooley: Will my right hon. Friend promise to use his best endeavours in the Security Council to ensure that there is no reduction in the effectiveness of the United Nations peacekeeping force in Cyprus during these events?

Mr. Callaghan: Yes, Sir, they have performed, and are performing, a very valuable role. Mr. Ivor Richard is in constant contact with Dr. Waldheim and other permanent members of the Security Council.

Mr. Evelyn King: Have the leaders of the Cypriot-Turkish community as opposed to the Turkish Government issued any statement on this situation?

Mr. Callaghan: I have not seen one.

Mr. Lee: On the point made by my hon. Friend the Member for Erith and Crayford (Mr. Wellbeloved), may we take it from my right hon. Friend's reply that in no circumstances will we recognise this odious man, Nicos Sampson, as President of Cyprus?
Secondly, if, unhappily, conflict should break out between Greece and Turkey, which of our NATO co-signatories shall we support, or shall we impartially supply British troops to both?

Mr. Callaghan: That seems a cross-examination that I would expect in the courts, but I do not think it would be helpful if I were to reply to all of it this afternoon.

Sir George Sinclair: Does the Secretary of State accept the claim of the Greek Government that this attempted coup was entirely local in origin in Cyprus, especially in view of the warnings given within the last fortnight by Archbishop Makarios of an attempted coup and attempt on his life and the visit last Friday of the commander of the Greek-officered National Guard?

Mr. Callaghan: It is clear that the Archbishop was in great apprehension about the action of these officers. That is why he asked, but without success, for their withdrawal from his National Guard. It seems as though he was correct in his fears.

Mr. Dalyell: What is being done about the problem of supplies for Service personnel in the sovereign base?

Mr. Callaghan: I think that my hon. Friend should put that question down to my right hon. Friend the Secretary of State for Defence.

TRADE UNION AND LABOUR RELATIONS BILL (DIVISIONS)

Mr. Prior: On a point of order, Mr. Speaker. In view of the exchanges yesterday, may I ask whether you are now aware that irregularities occurred in voting during the proceedings on the Trade Union and Labour Relations Bill on Thursday 11th July, including the Divisions on Amendments Nos. 101 and 66 which resulted in tied votes?

Mr. Speaker: I do not make any complaint, but I have not had very long notice of this point of order. I have heard of the allegations made and I heard what was said in the House of Commons yesterday, but nothing has been formally reported to me by the Tellers in the Lobby in which the irregularity is said to have taken place or by any other hon. Members involved in the irregularity. What I have to consider and decide is whether I should take it upon myself to make inquiries into the matter and report back to the House. That is a matter for me to consider and decide. However, if any right hon. or hon. Member has views on the matter I shall be happy to hear them.

Mr. Prior: Further to that point of order, Mr. Speaker. May I, through you, ask whether the Leader of the House will inform us what measures he proposes to take about an irregularity that has been reported?

The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): Further to that point of order, Mr. Speaker. I have looked into this matter since our exchanges yesterday


and my right hon. Friend the Chief Whip has discussed the matter with the Opposition Chief Whip. I understand that my right hon. Friend the Prime Minister has also exchanged letters with the Leader of the Opposition. I am quite sure that a number of clear points emerge from all this.
The first is that my right hon. Friend the Chief Whip acted in perfectly good faith.
The second is that my right hon. Friend the Chancellor of the Duchy of Lancaster was not on the premises. He should have been here, but he did not know it. [HON. MEMBERS: "Oh."]
The third point is that the Opposition Whips knew that my right hon. Friend was not on the premises four hours and 20 minutes before Third Reading of the Bill—[HON. MEMBERS: "Oh"]—after inquiries, including one under an assumed name. It was four hours and 20 minutes before the matter was reported to my right hon. Friend the Chief Whip.
Therefore, a number of matters concerning these events are still shrouded in mystery. I think that by far the best way out of the immediate problem is the suggestion that I made yesterday; namely, that the Opposition parties put down identical amendments in another place, which they would have done anyhow, that these are brought back here and that we then have votes on them. I am sure that that is the best way out of the immediate problem.
For the future, I think there is a case for referring our custom on this matter—[HON. MEMBERS: "Cheating."]—to the Select Committee on Procedure. If that has the general agreement of the House, I shall be happy to see that it is done.

Mr. Prior: It is clear from what the Leader of the House said that there was an irregularity in that the Chancellor of the Duchy of Lancaster was not on the premises and that he should have been if he was to be nodded through. Those are the facts. That being so, would it not be right for the House to follow the precedent that it has followed on previous occasions of asking the other place to return the Bill to the House of Commons so that the irregularities can be put right before it is delivered to that other place?

Mr. David Steel: In your reply to the original point of order, Mr. Speaker, in passing you said that you had not been informed by the Tellers of any irregularity. Since I was the Teller on Amendment No. 66 in the "No" Lobby and the Chancellor of the Duchy of Lancaster was nodded through, may I inform you now that I have read a Press statement that he was not present in the House on that occasion?

Mr. Speaker: I think that my reference was to all the Tellers.

Mr. John Ellis: Further to that point of order, Mr. Speaker. You may like to know that some of us appreciate your position in this matter. When a vote is declared it is impossible for anyone in that Chair to know the rightness or wrongness of the result. Some of us would support you in the view that, whatever has happened, it is not for us to come creeping to you at this stage expecting you to get us out of the mess. The solution lies with us and we should take it on board, however unsatisfactory it is.

Mr. Speaker: I have considerable sympathy with that point of view.

Mr. Onslow: Further to that point of order, Mr. Speaker. The Opposition likewise have considerable sympathy with you because you were put in the difficult position of having to exercise your casting vote and were therefore involved. The practice of the Speakership therefore becomes a matter to be considered in this regard. May I put it to you that, great though your powers may be, it is not within them to allow to be recorded in HANSARD on a Division that a right hon. Member was present for voting when by his own admission and general agreement he was not, and could not, have been present. Therefore, there can be no question of the record standing in the form where presumably it will stand when we get a HANSARD to record the Division and there can be no justification for you having been called upon to exercise a casting vote. This is a most irregular position. It is intolerable that the Bill should have gone forward from this House to another place as if it had gone forward regularly.

Mr. Wellbeloved: Further to that point of order, Mr. Speaker. While joining in the general condemnation of the Chancellor of the Duchy of Lancaster for absenting himself from this House, may I ask you to take into account in your consideration of the matter that an Opposition Whip—namely, the hon. Member for Reading, South (Dr. Vaughan), I understand—telephoned the home of my right hon. Friend the Chancellor of the Duchy at about 7 o'clock in the evening, ascertained that he was not in the House, informed his superiors in the Opposition Whips Office, and yet they failed to bring that absence to the attention of the Government Chief Whip? Will you take into consideration in any inquiry that you may set up that the Government Whips Office acted with honour and integrity in this matter? If blame is to be apportioned, it must fairly fall upon the head of the Chancellor of the Duchy of Lancaster, who ought to have been in the House, and upon the Opposition Whips, who failed to have the integrity and courtesy to inform my right hon. Friend the Government Chief Whip.

Mr. Thorpe: Can you help the House on this point, Mr. Speaker, leaving aside the peripheral point? My colleagues and I had no idea where the Chancellor of the Duchy of Lancaster was, but assumed that he was probably in the House, as otherwise he would not have been nodded through the Lobby. The Leader of the House, having accepted that an inaccuracy occurred in this House, said that the only forum in which it could be put right was another place. [Interruption.] Indeed. Some of us feel that that is a most extraordinary procedure. On the advice that you have taken and sought, Mr. Speaker, can you tell us whether there is a procedure whereby this House can put right its own inaccuracies and does not have to rely on another place?

Mr. Faulds: It must go out from the Government side of the House that, however inadvertently, a parliamentary impropriety has occurred. The matter of that evening's debate must be decided by this House, and a recount taken before it is considered by another place.

Mr. Strauss: Further to that point of order, Mr. Speaker. Is there not general agreement that the vote taken the other night must be reviewed and that it cannot

stand? Two propositions are put forward, as I understand it. One is that the matter should be put right by recalling the Bill, as the right hon. Member for Lowestoft (Mr. Prior) suggested. That is bound to be a highly dilatory and very cumbersome way of dealing with the matter. [HON. MEMBERS: "No."] From the point of view of simplicity of action and effective action, is it not much better that the proposal of my right hon. Friend the Leader of the House should be adopted? We should have exactly the same effect more quickly.

Mr. Maxwell-Hyslop: Nobody has yet mentioned the Journal of the House, which is supposed to be the official accurate record for all time of events in the House. It is not the case that the Chancellor of the Duchy of Lancaster voted against the two amendments. I do not believe that any hon. Member disputes that. As the right hon. Gentleman did not vote against the amendments, it must lie within your authority, Mr. Speaker, to see that the Journal of the House records the fact that he did not vote against them. Otherwise, the Journal ceases to be an authoritative record of what does and does not happen in the House. Therefore, the correct means of establishing the truth has nothing to do with HANSARD, which has no locus standi in the matter, but has to do with the Journal of the House. I believe, Mr. Speaker, that you should instruct that the Journal records the real vote, which will show that one more vote was cast for the two amendments than was cast against them. That surely lies within your authority. I put it to you that it is your duty to the House so to do.

Mr. Heath: Is not the position that it is now agreed by the Leader of the House and, I think, by everyone that irregularities took place?
The right hon. Gentleman mentioned an accusation against my hon. Friend the Member for Reading, South (Dr. Vaughan), one of the Opposition Whips. In reply to the Prime Minister's letter, which I received just before I came on to the Opposition Front Bench, I shall say that after examination I find no truth whatever in the allegations.
As for the constitutional procedure, may I refer to the point made by the


right hon. Member for Vauxhall (Mr. Strauss). I think that the constitutional question is this: is it right—perhaps this is where we differ from the Leader of the House—that an acknowledged irregularity in this House, which is the responsibility of this House, should be left to the other place to put right? Is it constitutionally proper to ask the other place to take responsibility for putting right an irregularity in this House? I suggest that many hon. Members on both sides of the House feel that that is not constitutionally right, and that if we are responsible for an irregularity we should take responsibility for putting it right.
With regard to the right hon. Gentleman's second point about a dilatory procedure, I understand that it would be possible for you, Mr. Speaker, to ask the Lords—as was done in 1972 for another reason—to return the Bill to this House. As the Second Reading is going on there now, it would be necessary for you to request this of the Lords during the debate on Second Reading, in which case the Lords, having reached their decision whether to do so, would be able to do it before the end of business tonight. Therefore, it would not be a dilatory procedure.
May I suggest, Mr. Speaker, that what follows would be what has already been suggested by the Liberal Whip, that you could ask the Tellers to report the incident, and as a result of their report the correction could be made.

The Chancellor of the Duchy of Lancaster (Mr. Harold Lever): As this is the first word I have to say to the House on the matter, it is right that I should begin by apologising to right hon. and hon. Members for having put them to this inconvenience.
It is also right, however, that I should tell the House, difficult as it may be for some on either side of the House to accept, that when I stayed away I did so in the belief—wholly wrong, and I am not entitled to rely upon it—that I was the object of some chivalrous indulgence by the Tory Whips. But I have to inform the House that, beyond any doubt whatever, there was a telephone call from the hon. Member for Reading, South (Dr. Vaughan) at around 7 o'clock, when my secretary informed the hon. Gentleman that I was in another room but not available, for reasons that I will not go into

now, and offered to ring him back. The hon. Gentleman, who had originally announced himself as Mr. John Smith, then announced that he was the hon. Member for Reading, South, the Tory Whip. In my childish innocence, I thought that the John Smith was the former Conservative Member of the House when I heard my secretary tell me that the man who had said that he was Mr. John Smith then said that he was the hon. Member for Reading, South.
That does not excuse my fault, but perhaps explains to some hon. Members why I felt that the nodding through that was to take place in my absence would take place in the full knowledge of, and with the acceptance of, the Opposition Whips.
Rightly or wrongly—I do not know even at this moment—I regarded the nodding through process as a matter between the Whips. I thought that if the Whips were content that I registered at the beginning of a Committee stage and then went out, that was all right. If the Whips were not so content, I would of course have come back. I was at home at 7 o'clock when the hon. Gentleman telephoned. If the Opposition Whips had let me know that they resented my having left the House, I would have returned.
There is one general point on which you might help, Mr. Speaker. I have been in the House for about 30 years. I am told that I should know by now that people have been brought here in ambulances. I am not unaware of that, but I have not been aware that at any Committee stage Members have been shuttled by ambulance to and from hospital or have necessarily been in the House the whole time.
However, I should like to conclude by saying that I deeply regret the inconvenience and disturbance I have caused to the House and its business, because it was wrong of me, even in those circumstances, to act on the assumption that the Tory Whips had assented and that that permitted me to be absent. I was wrong, and I apologise to the House for it.

Mr. Grimond: On a point of order, Mr. Speaker. I personally have great sympathy with the Chancellor of the Duchy of Lancaster, and I am sure that,


as usual, the House will accept with great good will his explanation of what happened. But this has nothing to do with the substance of the matters that we are discussing. This House has passed a very important piece of legislation, and the country will think it totally irresponsible if we allow it to go to the House of Lords in a form which it is agreed is wrong. To my mind, it cannot be beyond the powers of this House to recall the Bill and get the matter put right so that it may be examined in a proper form.

Several Hon. Members: rose—

Mr. Speaker: Order. Perhaps I may be allowed to say a word. It has now come to my knowledge officially that there was an irregularity in this Division. It has been said on the Floor of the House, and it has been confirmed. The question is where do we go from there? The Leader of the Opposition referred to a case when the House of Lords was asked to return a Bill to this House. However, that cannot be done on my request. It requires a motion of the House.
There is the additional difficulty that I would have reserved my opinion on these matters until tomorrow but for the fact that the House of Lords is at the moment engaged in the Second Reading discussion of the Bill, which has to finish by 10 o'clock this evening. But there was an irregularity, and the vote was not the right vote. However, the House must decide what to do about it.

Mr. George Cunningham: On a point of order, Mr. Speaker. May I suggest to you and the other right hon. and hon. Members concerned that there is a simple method of disposing of this matter which is not open to the objection that it is leaving it to the House of Lords to do our business for us. We sometimes make procedural mistakes in this House, and the House exonerates itself from the consequences of them. If a motion were taken on a vote that, notwithstanding the irregularity which took place last Thursday, the House none the less asks the Lords to proceed with their consideration of the Bill—we all understand that a further vote will be taken when it comes back here—I suggest that we should have corrected the situation within this House and that that would be both the easiest and

most procedurally correct and foolproof way of dealing with the matter.

Dr. Vaughan: On a point of order. Mr. Speaker—

Hon. Members: John Smith.

Mr. Speaker: Order. Before the hon. Member for Reading, South (Dr. Vaughan) puts his point of order, may I remind the House that from the point of view of this discussion these various charges and counter-charges are not relevant.

Dr. Vaughan: Although I agree entirely with you, Mr. Speaker, that charges and counter-charges serve no useful purpose and are side issues to the main problems facing the House today, since my name has been mentioned—[HON. MEMBERS: "John Smith."]—may I tell the House that at no time was there any attempt to conceal who it was who was telephoning—

Dr. M. S. Miller: But you did telephone.

Dr. Vaughan: Certainly I telephoned—[Interruption.] May I continue by saying that it seemed to me an essential part of my duty to inquire, since I was seeking the right hon. Gentleman in the House, whether he was in fact at home. As I say, at no time did I give any assumed name.
It has been suggested that there was then an undue delay. This was merely in order to try to ascertain for certain whether the right hon. Gentleman was away from the House, rather than making an accusation which we felt to be extremely serious.

Mr. Short: Quite honestly, the hon. Member for Reading (Dr. Vaughan) has confirmed that he telephoned some hours before, and so it is now established that the Conservative Party knew that there was an irregularity but that the Government side of the House did not know. It is a sorry business. The right hon. Member for Lowestoft (Mr. Prior) knew that there was an irregularity four hours before the vote. My right hon. Friend did not know that there was an irregularity. In view of this, would not the simplest way out of the difficulty be to adopt


my proposal allowing this House—not the other House—to vote on these amendments again?

Mr. Prior: We have now heard the views of the Leader of the House again. He accepts that there was an irregularity. That there has been an irregularity is not in doubt, and, Mr. Speaker, you yourself have said that there was an irregularity. Therefore, may I suggest to the Leader of the House that the right way to proceed now is for a message to be sent to the Lords to request that they will be pleased to return to this House the Trade Union and Labour Relations Bill because of the irregularities in voting on Amendments Nos. 101 and 66? If necessary, would it be in order for me to move such a motion?

Mr. Speaker: I think that it would be in order for such a motion to be moved.

Mr. Prior: rose—

Mr. Short: rose—

Hon. Members: No.

Mr. Speaker: Order. This is an important and serious House of Commons matter. I hope that hon. Members will listen in silence to what is said.

Mr. Short: Can you, Mr. Speaker, accept a motion of this kind?

Mr. Speaker: I am advised that I am within my powers to do so.

Mr. Prior: rose—

Mr. Ioan Evans: On a point of order, Mr. Speaker. It has been said that the hon. Member for Reading, South (Dr. Vaughan) knew what was happening. May we be informed, before the motion it put to the House, how many other members of the Opposition Front Bench knew about it?

Mr. Prior: On a point of order, Mr. Speaker—

Mr. Moonman: On a point of order—

Mr. Speaker: Order. The right hon. Member for Lowestoft (Mr. Prior) has risen on a point of order.

Mr. Prior: I think that the House would be better served at the moment if it accepted that there has been an irregularity and that, in view of that and because it must he right that the House

of Commons should correct any irregularities for which it is responsible, I am certain that, whatever the side issues, we should do well as a House of Commons to ask for this procedure to be adopted and for the Leader of the House to move this motion now so that the Bill may be returned for the House of Commons to take the necessary decisions.
I do not want to cause the right hon Gentleman any further embarrassment. I understand the position. I know how difficult it is. But I believe that, in the interests of the House of Commons and the future of the House of Commons, this is a matter that we should put right in the House of Commons now.

Mr. Skinner: rose—

Mr. Speaker: A point of order?

Mr. Skinner: rose—[Interruption.]

Hon. Members: Get on with it.

Mr. Skinner: I have plenty of time. [Interruption.] Mr. Speaker is not listening yet. Is it not worth recording what no one has as yet mentioned and what ought perhaps to be borne in mind—that these so-called irregularities were to do with the Industrial Relations Act which, when is was a Bill was brought into this House by another form of irregularity—[Interruption.]—known as the guillotine, restricting the number of days for debate. It seems to me that as a result of this technique and what took place the Opposition are trying to inject a breath of life into that discredited Act as long as they possibly can.

Mr. Speaker: That is not a point of order.

Mr. Skinner: I have not reached my point of order yet.

Mr. Speaker: I have had quite enough. The House ought to consider this matter seriously. I will suspend the Sitting for 20 minutes.

4.11 p.m.

Sitting suspended—

4.31 p.m.

On resuming—

Mr. Speaker: The position, as I see it, is this. On the statement of the right hon. Gentleman the Chancellor of the Duchy, there was an irregularity in the


vote. It follows, therefore, that the Journal must be altered. The copy of the Bill sent to the other place was incorrect. Therefore, this becomes a matter of privilege and I would give precedence to a motion relating to it.

Mr. Prior: Further to that point of order, and in view of your ruling, Mr. Speaker, may I ask whether the Leader of the House will now move the necessary motion "That the Bill be returned to the House of Commons"?

Mr. Short: In view of the behaviour of the Opposition in this matter, I am not prepared to do so. [Interruption.]

Mr. Speaker: Order. The right hon. Gentleman's answer was "No".

Mr. Stonehouse: rose—

Mr. Heath: There has been a period for reflection. One realises that on these occasions the House naturally has very strong feelings. We can understand that the Leader of the House himself feels very strongly about it. He put forward a solution which I think most hon. Members would feel did not on the whole commend itself to the House. An alternative solution has been put forward which I think most hon. and right hon. Members would like to see accepted. I ask the Leader of the House in these circumstances to reconsider the answer which he has just given, and carry out his responsibilities—which I know he wants to do, to the House as a whole—recognise the feelings of the House, which it is customary for any Leader of the House to do in these circumstances, and give the House now the opportunity of passing this motion in order to get the Bill back from the other place. I ask the Leader of the House to carry out his responsibilities to the whole House, and to move that motion himself.

Mr. Stonehouse: rose—

Mr. Speaker: Is this a point of order?

Mr. Stonehouse: On a point of order, Mr. Speaker. The House of Commons is facing a very grave situation. I think it extremely important that voices from both sides of the House should be heard on this question. In view of your statement, Mr. Speaker, following the suspension of the Sitting, there is a body of

opinion on the back benches on this side which finds itself in agreement with the proposal that the Leader of the House should move the motion, and move it formally. I therefore beseech him to bear that in mind.

Mr. Tebbit: May I draw the attention of yourself, Mr. Speaker, and of the House to the fact that, regardless of what arrangements are made between the Front Bench leaderships, across the Floor, through the usual channels, or behind the Chair, there are many back-bench Members who do not have knowledge of these matters? When we vote in the Lobby we are under the impression that we are abiding by the rules of the game. I ask you, Mr. Speaker, to protect us by making sure that when arrangements are made they are honoured. Therefore, I appeal to the Leader of the House to do as requested by his right hon. Friend.

Mr. George Lawson: On a point of order, Mr. Speaker. Is it not the case that when Whips of whatever side nod a Member through the Lobby, those Whips are guaranteeing the presence of that Member within the precincts of the Palace of Westminster? It is not the fault of my right hon. Friend the Chan-cello of the Duchy. Such a fault might easily arise. The fault lies with the Whips of whatever side who nod a Member through.
I should like to put this to my right hon. Friend. Since a mistake has clearly been made, in that those who are responsible for guaranteeing a Member's presence within the precincts of this Palace have guaranteed that the Member was here, it seems to me—I am speaking for many hon. Member on this side of the House, too—that the right thing to be done is this, and the House cannot function unless we do things in this way. A declaration should be made that a mistake has been made, and whatever is necessary should be done to rectify that procedure.

Mr. Short: In view of the reasonable way the right hon. Gentleman put his point, if you, Mr. Speaker, can assure the House that we shall have an opportunity under this procedure to vote again on these amendments, I will move the motion.

Mr. Speaker: I am afraid that, how ever much I might want to do so, that will not be within my power. I can order the figures to be changed to what they should have been.

Mr. Short: This means that if I accept what the right hon. Gentleman has suggested, the House is not given an opportunity to vote on these amendments again. If my solution were adopted the House would have an opportunity to vote.

Mr. Onslow: May I put it to the right hon. Gentleman the Leader of the House that there is an important reason why the House should reject the opportunity that he is offering, because we are by tradition and rule—this is surely what we are seeking to achieve now—allowed to vote once on an amendment at each stage that it comes before the House. We have here a situation where we have voted on the amendments which have been before the House. The vote was a wrongly recorded vote, for reasons with which we are now familiar and which it will not help us to go over again because they are incidental and irrelevant in many cases.
I put it to the right hon. Gentleman that what he as Leader of the House is seeking to achieve is that the House should take two bites of the cherry which it has already swallowed. There is no way in which the House can do that. The House has voted. The vote was a regular vote so far as everyone who took part in it was concerned. But the result is irregular because one Member was recorded as having taken part in it when, in fact, he did not do so.
What the Leader of the House is seeking to achieve is that the Bill should go to another place and be amended there, which would open the way for this House to vote again on a Lords amendment. But that is not the matter which is before us. The matter before us is that the vote on the amendment which has already been taken should be accurately recorded, acted upon and not taken again.

Mr. Short: It may be within the recollection of the House that whenever an irregularity in a Division is reported to you, Mr. Speaker, you call another Division. The procedure now proposed would deny that opportunity.

Mr. Wellbeloved: It will be within your recollection, Mr. Speaker, and that of the House that during the proceedings of the Bill an irregularity was reported to Mr. Deputy Speaker and he ordered another Division. In view of the serious situation which confronts Parliament, will you consider that precedent?
We now know that had both the Government teller and the Opposition teller jointly been in possession of the knowledge that the Chancellor of the Duchy of Lancaster was not present within the precincts, there would no doubt have been a dispute when my right hon. Friend the Member for Bermondsey (Mr. Mellish) "nodded through", and that would have been reported to you. The fact that the Government teller on the door was not informed by the Opposition teller is in itself, in my view, an irregularity of almost equal importance to that of the absence of the Chancellor of the Duchy of Lancaster.
Even if it meant a further short suspension of the sitting, would you take this situation into consideration, because it would be intolerable if on one occasion during the passage of the Bill an irregularity was immediately reported and caused a further vote to be held, whereas a similar irregularity reported at a later stage did not carry the same opportunity for a further vote to be taken.

Mr. Speaker: It would be an easy way out for me but I do not think that it would be right. The figures are precise. There has been an admission as to one vote being counted which should not have been counted. My impression is that another vote is allowed when there is a dispute about what actually happened. In this case there is no dispute.

Mr. Bidwell: Before the suspension, Mr. Speaker, you confessed that you were in somewhat of a dilemma because the Bill is now before the other place. Since resuming its sitting, the House still seems to be in a dilemma. Is not the practice of "nodding through" a convention and not a rule? Therefore, would you now accept a motion, in order to relieve the difficulty, to the effect that the Third Reading of the Bill, as amended, be upheld?

Mr. Hugh Fraser: Could the House revert for a moment to your original


statement, Mr. Speaker, wherein you said that this was a matter of privilege and that an incorrect record of the House should be put right? Surely it is the duty of the Leader of the House to move such a motion, whatever the local politics involved, because this affects the whole rectitude of the House of Commons.

Several hon. Members: rose—

Mr. Prior: May I suggest that I should now move the motion? I think that that would be for the convenience of the whole House.

Several hon. Members: rose—

Mr. Speaker: I will take two more points of order beforehand.

Mr. George Cunningham: The original factor which has arisen this afternoon, and which is new today as against yesterday in the knowledge of most of us, is that one of the four tellers who appeared at the Table last Thursday knew at the time that one of the votes recorded on the piece of paper for which he was taking responsibility was an improper vote.
Some of us on this side of the House have freely accepted, yesterday as well as today, that there was a mistake or a blameworthy action by this side of the House. But it is now clear that there was also a blameworthy act on the part of the teller of the Opposition. If that is right—and I think that most of us know that it is near enough right—then the right way out would be for my right hon. Friend the Leader of the House to move a motion that the House acknowledges the irregularities of last Thursday but invites the House of Lords to proceed with its consideration of the text which it now has, on the understanding that when the matter comes back to this House there will be a Division.
No side comes out of this affair very creditably, and if we are not careful the whole House will come out of it with no credit at all. I invite you, Mr. Speaker, at least to confirm that that is a motion which you would be prepared to accept if the Leader of the House were prepared to move it.

Mr. Dunn: I was one of the Government tellers on both of these occasions

and I ought to remind the House that earlier that evening there was a disputed vote which I reported faithfully and with integrity, and that a second Division was called. Had I known that there were further disputes in the other two Divisions in which I participated—[Interruption.]—I would have thought that in courtesy hon. Members would listen to those whose integrity has been challenged. Had I been informed by any of my colleagues who were telling on those occasions that there was a dispute. I would have brought the matter to the notice of the Chair, and as far as I am concerned a second Division would have been required. I hope that the House will accept that explanation. I have already indicated that earlier in the evening that was the way in which we behaved.

Mr. Short: We cannot go on like this. We must resolve the matter. I have tried to help the House on two occasions, Let me try once more. [HON. MEMBERS: "Do your duty"] A great many other people want to do their duty. If this procedure is adopted, Mr. Speaker, I understand that you will, without calling the Whips, make a declaration about the results of the Divisions on these two amendments and declare them carried. May I ask whether you will agree, immediately following that, to allow the vote on Third Reading to be taken without further debate? One consideration in this matter is that if the Third Reading is delayed to another day, the House must sit into the second week in August, and I want to avoid that.—[Interruption.] This is an important matter for hon. Members who have children, if not for all hon. Members. Could I ask whether you would allow that, Mr. Speaker? If you would agree to that, I should be prepared to move the motion to expedite the matter.

Mr. Heath: Perhaps I can be helpful to the Leader of the House on this matter. I can obviously speak only for my right hon. Friends and myself, not for anyone else, but I understand the right hon. Gentleman's point on this matter. We do not wish to delay this Bill. That is not the purpose of the point that we have raised. We accept that it is the Government's Bill—it has had a Third Reading and will receive another Third Reading. As I have said, we have no desire to delay the proceedings in the other House.
I believe that this procedure will allow the Bill to come back when the Lords have had their Second Reading debate but before it has been formally given a Third Reading. So, from the point of view of time, I am prepared to ask my right hon. and hon. Friends—I hope that the Leader of the Liberal Party will do the same—to enable the Leader of the House to get his Third Reading, I hope without further delay, after this irregularity has been put right. I would give him that assurance from this Bench.

Mr. Short: In view of that—I would remind my hon. Friends that we are denied the right to vote again on this—to expedite the business of the House. I beg to move,
That the proceedings of 11th July in relation to the Third Reading of the Trade Union and Labour Relations Bill be null and void; that a message be sent to the Lords to request that they will be pleased to return to this House the said Bill because Clause 27 and Schedule 1 are incorrect; and that when the Bill has been returned by the Lords and corrected it shall be read the Third time.

Question put and agreed to.

Mr. Faulds: On a new point of order, Mr. Speaker. Since it has been a long-established tradition in the House that hon. Members treat each other and regard each other as "honourable" Members, what sanction does the House have against a Member who passes himself off as somebody else—Dr. Gerard Vaughan as Mr. John Smith? Are we entitled to suspend him, or what action can we take against a man who behaves in such a dishonourable way?

Mr. Speaker: That is not a matter for the Chair. I think that the general rule is that allegations of that sort by one hon. Member against another can be made only on a substantive motion.

STATUTORY INSTRUMENTS

Mr. Speaker: Unless there is any objection, I propose to put together the Questions relating to the following three Statutory Instruments.

Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments),
That the draft Coal Industry (Borrowing Powers) Order 1974 be referred to a Standing Committee on Statutory Instruments.

That the Legal Aid (Financial Conditions) Regulations 1974 be referred to a Standing Committee on Statutory Instruments.
That the Legal Advice and Assistance (Financial Conditions) Regulations 1974 be referred to a Standing Committee on Statutory Instruments.—[Mr. Edward Short.]

Question agreed to.

PROTECTION OF PASSENGERS (FARES) BILL

4.53 p.m.

Mr. George Lawson: I beg to move,
That leave be given to bring in a Bill to limit the extent to which forfeiture of fares, including deposits paid, may be included in contracts for the carriage of passengers.
I have been provoked into asking for permission to bring in the Bill because of the experiences of two of my constituents—[Interruption]—

Mr. Speaker: Order. Will hon. Members conduct their conversations outside?

Mr. Lawson: I was saying that I was provoked to ask for permission to bring in the Bill by the experiences of an old couple in my constituency who had arranged to go on holiday to Australia, a holiday which would cost them virtually all their life savings. The return fare to Australia would cost them over £1,000. They arranged the trip having been required by the conditions of their contract of passage to pay the full fare there and back before hand.
The company concerned, Chandris Shipping Lines Ltd. is a private company. Its chairman is a Greek, by name Chandris, and I understand that one of the other directors is his brother. This is a private shipping company with £500,000 £1 shares, of which 400,000 have been issued. All of those 400,000, with the exception of two, are owned by another company, a private company called Fountain Company Ltd., registered in the Isle of Guernsey. So the chairman, Mr. A. Chandris, and his brother, who is also a director, have one share each. The company operates mainly through travel agencies by taking passengers to Australia. It insists as one of the terms of contract that the full payment be made a substantial time before hand.
What happened in the case of my constituents is that Mr. McMillan of Wishaw fell ill—there was no question about his becoming ill; he is 75 years old—and they


were obliged to cancel the trip. They were able to give only 21 days' notice of the cancellation. The company, which had already received the money, insisted on retaining the full fare from this country to Australia, returning only the fare from Australia back to this country. That part of the fare that they retained amounted to £599·50, that is, £600. The company insisted that the terms of the contract entitled it, unless it had been given 28 days' notice, to retain the full fare out.
Various appeals have been made to the company. I have written to it, as have the solicitors for my constituents. The company turned down the appeals on the grounds that the old couple had not properly insured themselves. I phoned the company and spoke to someone describing himself as the public relations officer. I said I would like to come and discuss the matter with the Chairman of the company, Mr. A. Chandris, and he said that he would get in touch with me after seeing whether it would be worth my while meeting Mr. Chandris.
I was subsequently told that Mr. Chandris was not prepared to meet me. I phoned later and asked whether it would be possible to discuss the matter with Mr. Chandris over the telephone. After another delay, I was told that Mr. Chandris was not prepared to discuss the matter with me, even over the telephone. We have, therefore, a situation in which an old couple's life savings have been—perhaps I should not use the word "confiscated"—forfeited to this company. No appeal that can be made to the company makes any difference. The company is simply insisting that because the old couple failed to insure against cancellation nothing can be done. In going into this matter I have formed grave doubts whether the couple were properly advised about cancellation and how important it was that they should insure against cancellation. But I leave that matter aside.
I am emphasising that we have circumstances in this country in which companies can apparently draw up terms and conditions of contract and that someone accepting those terms may have virtually no knowledge of what they are. A clerk in a travel agency, perhaps, or a bank selling

an insurance policy, may go over part of these terms and conditions of contract and may himself sign to say that he is authorised to say that people understand the terms. Perhaps I have put that wrongly. He may get them to agree that they understand the terms and conditions of contract although he himself may not be clear as to what they are. This having been done, it means that nothing else can happen and that the law is wholly on the side of the person or firm who impose the conditions.
I have with me the document which carries these terms and conditions of contract. The terms and conditions are contained on a single sheet of paper which carries more than 3,000 words. It will be seen that it is not a question of reading the small print but of reading the microscopic print. On that basis, this firm is enabled apparently, according to the law, to hold on to this sum, which is virtually £600, and say, "Come what may and do what you may, no matter what appeal you make or what the moral case is, or how hard up you are, we have got this money and we shall hold on to it." Unfortunately, the law as it stands will do nothing about it.
The Bill would seek, first, to ensure that terms and conditions of contract are laid out in such a fashion that there can be no dubiety as to what is meant. On important matters such as this, we should be perfectly clear about the terms and conditions. Secondly, we must have a law which imposes a limit on what can be charged. It should not be 100 per cent. confiscation—I use that word—but a definite although naturally relatively small and fair limit as to how much can be charged. We should also insist that there should be some means whereby there can be proper arbitration in disputes of this kind. This firm does not belong to any organisation. It goes on its own way. Clearly, we should not be prepared to permit this kind of thing. The Bill would ensure proper means of arbitration in these matters. That is the purpose of the Bill.

Question put and agreed to.

Bill ordered to be brought in by Mr. George Lawson, Mr. William Hamilton, Mr. John Smith, Mr. William Small, Mr. Robin F. Cook, Mr. Harry Ewing, Mr. John Ellis.

PROTECTION OF PASSENGERS (FARES)

Mr. George Lawson: accordingly presented a Bill to limit the extent to which forfeiture of fares, including deposits paid, may be included in contracts for the carriage of passengers: and the same was read the First time; and ordered to be read a Second time upon Friday, 19th July, and to be printed. [Bill 94.]

WAYS AND MEANS

DISALLOWANCE OF INTEREST (CONSEQUENTIAL AMENDMENTS)

Resolved,
That charges to income tax and corporation tax (including charges for past years of assess

ment or accounting periods) may be imposed by provisions corresponding with or consequential on provisions restricting the circumstances in which interest may be deducted from or set off against income for the purposes of income tax.—[Mr. Joel Barnett.]

PROCEDURE (FUTURE TAXATION) (No. 3)

Resolved,
That, notwithstanding anything to the contrary in the practice of the House relating to the matters which may be included in Finance Bills, any Finance Bill of the present Session may contain provision taking effect in a future year for substituting a large amount for the £2,000 referred to in section 198(3) of the Income and Corporation Taxes Act 1970.—[Dr. Gilbert.]

Orders of the Day — FINANCE BILL

As amended (in the Committee and in the Standing Committee), considered.

Ordered,
That on consideration of the Finance Bill any Amendments relating to the Clauses and Schedules be considered in the following order

'(1)If a person carrying on a trade has on or after 1st June 1972 incurred expenditure in taking steps specified in a notice served on him by the fire authority under section 5(4) of the Fire Precautions Act 1971, and—


5
(a) the notice was issued on an application for a fire certificate in respect of premises used by him for the purposes of the trade; and



(b) an allowance or deduction in respect of the expenditure could not, apart from this section, be made in taxing the trade or computing the profits or gains arising from it;


10
Chapter I of Part III of the Finance Act 1971 shall apply as if the expenditure were capital expenditure incurred on the provision of machinery or plant for the purposes of the trade, and as if the machinery or plant had, in consequence of his 15 


15
incurring the expenditure, belonged to him and had been in use for the purposes of the trade; and as if the disposal value of the machinery or plant were nil.


(2)
This section shall be construed as if contained in Chapter I of Part III of the Finance Act 1971 '.—[Dr. Gilbert.]

Brought up, and read the First time.

5.5 p.m.

The Financial Secretary to the Treasury (Dr. John Gilbert): I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. George Thomas): With this new clause we may discuss new Clause 7—(Fire precautions work in hotels and boarding-houses to qualify for tax relief—and new Clause 31—(Relief for expenditure on fire precautions in hotels and boarding-houses)

Dr. Gilbert: I thank you, Mr. Deputy Speaker, for guiding us once again through the intricacies of procedure.
The effect of new Clause 10 is to provide tax relief in respect of expenditure incurred as a result of a notice served by a fire authority under Section 5(4) of the Fire Precautions Act 1971 to the extent that the expenditure does not already rank for tax relief under the existing law. It does so by treating the expenditure not already entitled to relief as if it were expenditure incurred in the provision of machinery and plant. In effect, this extends the 100 per cent. first year allowance to such expenditure. The House will be glad to learn that the relief we propose shall apply to expenditure incurred on or after 1st June 1972. This

of Clauses and Schedules, namely: Clauses 1 to 15; Schedule 1; Clauses 16 and 17; Schedule 2; Clauses 18 to 33; Schedules 3 and 4; Clause 34; Schedule 5; Clause 35; Schedule 6; Clauses 36 to 39; Schedules 7 and 8; Clause 40; Schedule 9; Clauses 41 and 42; Schedule 10; Clauses 43 and 44; Schedule 11; Clauses 45 and 46; Schedule 12; Clause 47; Schedule 13; Clauses 48 to 51; Schedule 14.—[Dr. John Gilbert.]

New Clause 10

EXPENDITURE ON FIRE SAFETY

element of retrospectiveness, at any rate, I hope will commend itself to hon. Members in all parts of the House.

At this stage it would not be appropriate for me to speak for long on the subject of the new clause. I am sure that the sense of it is clear to all hon. Members. It arose out of a very valuable debate initiated in Committee by the hon. Member for Cornwall, North (Mr. Pardoe), following on suggestions made also by the hon. and learned Member for Dover and Deal (Mr. Rees), to which I undertook to respond at this stage of the proceedings on the Bill.

I want to make one or two comments on the other new clauses. Concerning new Clause 7, in the name of the hon. Member for Christchurch and Lymington (Mr. Adley) and new Clause 31, standing in the name of the hon. Member for Blackpool, South (Mr. Blaker) and his hon. Friends, our proposals are somewhat more generous than the proposals of the hon. Gentleman's new clause, in that that would apply only the industrial buildings allowance to expenditure of this sort, and this would afford relief of only 44 per cent. in the first year and 4 per cent. in each of the following years. Our proposal would give 100 per cent. relief for the first year and would allow that


relief to be carried forward if all of it could not be used in the first year.
Regarding the amendment to new Clause 10 in the name of the right hon. Member for Devon, North (Mr. Thorpe) and his hon. Friends, on page 108, this would widen the scope of relief very considerably to cover expenditures on extensions to existing buildings. It is our view that this is a relief of an entirely different type. I recognise the arguments that lie behind it, but it would be our view that where a hotel owner or restaurant owner was contemplating a wholly new extension to his premises he would naturally take into account the proper cost of incorporating adequate fire precautions in those premises. What we are trying to do in new Clause 10 is to address ourselves to the situation in which premises are in existence and an owner suddenly finds that he has to expend money—and probably a disproportionate amount, because conversions cost more than would these provisions in new properties—in order to bring his premises in line with adequate safety requirements.

I hope, therefore, that the hon. Member for Cornwall, North will accept that the Government have met him in a reasonably generous way and that the relief that we propose in new Clause 10 will meet the requirements of his constituents and the industry generally.

Mr. Robert Adley: I declare an interest in the hotel industry. Many of my hon. Friends and many members on the Government side will be aware that the subject with which we are now involved has been of great and indeed grave concern, particularly to keepers of small hotels for well over two years. I congratulate the Government without reservation on the way they have accepted the proposal which has been put to them for a long time. It is a matter of considerable pleasure to see how the Government have now dealt with this question.
I would like confirmation that the words "carrying on a trade" in new Clause 10 includes hotels and boarding-houses. Such confirmation need hardly be necessary. I am merely seeking to get the point on the record, and I am grateful to the Financial Secretary for now indicating assent.
In moving the Government's new clause the Financial Secretary raid that it was more generous than new Clause 31. It leaves me almost speechless to recognise that this is so, and we are extremely grateful to the Financial Secretary.
It would be ungenerous of the Financial Secretary and myself, as Secretary of the Parliamentary Committee which deals with tourism, not to record our thanks to the Under-Secretary of State for the Home Department, who has carried our views to the Treasury, clearly to great effect. I am sure that the Financial Secretary will not mind my making the point that this issue was not first raised in Committee during our consideration of this year's Finance Bill. It has been of concern to many of us for a long time. On 25th April 1972 I suggested to the then Chief Secretary that what is now being done should be done. I received the reply:
I do not think I should be justified in singling out this particular form of expenditure for special treatment."—[OFFICIAL REPORT, 25th April 1972; Vol. 835, c. 1264.]
I do not wish to labour the point. At that time the then Government said that they needed proof of evidence that the Fire Precautions Act would impose severe hardship on small hotels. I think that that proof has been more than adequately provided and I hope that in future, whatever Government are in office, the views of a much neglected section of society—the small hotels and boardinghouse keepers—will be heard. I am sure that the Financial Secretary and many of my hon. Friends will not mind my paying tribute to a former member of the House—Dame Irene Ward—who took a tremendously active part in pursuing this question. She was one of the most outspoken members of the group of 20 Conservative Members who went to the Treasury two years ago and raised the point with the then Government.
I hope that the Government's new clause will provide the relief required, but I fear that there will still be many small hotel keepers, who are not making a profit, for whom the clause will not do as much as we would wish. We all support the Fire Precautions Act and we want to see as many hotels and boardinghouses as possible undertaking the work required under that Act at the earliest opportunity


The Government's proposal means in effect that a tax on safety is now to be removed. However, if it is proved that the proposal is not as effective as we all hope, I trust that the Government will keep their minds open towards providing grants for small hotels and boarding-houses, to ensure that the work required to be done under the Fire Precautions Act is carried out at the earliest opportunity.
I am also concerned with the way successive Governments and the House have dealt with the tourist industry. The question arises whether the Department of Trade is the best Department to he made responsible for the tourist industry, or whether the Department of the Environment might become more involved, as well as, certainly, the Home Office, with the tourist industry and the representations it makes.

5.15 p.m.

Mr. John Pardoe: I notice that in your wisdom, Mr. Deputy Speaker, you have selected an amendment in my name and the names of my right hon. and hon. Friends to the proposed new clause in line 5, after "notice", insert "or written recommendation", to be debated separately from this new clause. I wonder whether it would be helpful if I may refer to that amendment now. I am in your hands, and in the hands of the House in this point.

Mr. Deputy Speaker: Anything that will save time will find approval, but in this case it depends on whether the Government Front Bench, the Opposition Front Bench and the House agree. It seems that there is agreement.

Mr. Pardoe: I do not wish at this stage to move the amendment to which I refer. I first wish to thank the Government for what they are proposing. They have gone further than I expected and, I suspect, than the Opposition expected. The matter with which we are all concerned has been considered in the Finance Bill in Committee and in the House on several occasions.
In 1972 the present Chief Secretary and I both had separate amendments down when the Finance Bill was being considered and the matter was debated extensively. The arguments were knocked

down by the then Chief Secretary on behalf of the Conservative Government, and I am glad that amends have at last been made. I congratulate the Government on defeating the Treasury brief and winning through.
I do not propose to go into the basic problems of this matter, but I shall summarise the background. There was a great deal of support on both sides of the House when the Fire Precautions Act was passed but, as I have indicated in Committee, this Act has been a partial failure up until now. I do not say it has been a total failure. It became operative on 1st June 1972 and its aim was to bring existing buildings up to a satisfactory standard in regard to fire safety. All hotels and guest houses with accommodation for six people or more, including residential staff, have to be registered with the local fire authority. The Act requires not only that the premises be registered but that applications be made for fire certificates for the premises, as well as inspection by the fire authorities. Unfortunately, remarkably little progress has been made, for a variety of reasons.
First, the building industry has been extraordinarily drawn out, in the sense that an immense amount of work has been available for it in the period since the Act came into force. Many hotel keepers, with the best will in the world, have wanted to get the work done but have simply been unable to get it done. Secondly, there has been a drastic shortage of inspectors in the fire service. Perhaps all of us in the House were to blame, when we passed the Act in 1972, for not recognising how much administrative work was involved in the full implementation of it. That is still a problem.
The new clause will mean a fairly handsome financial incentive, but there will still be a shortage of inspectors. Unfortunately, because of the reasons I have mentioned, and other factors, only 1 per cent. of all hotels and boarding-houses in this country have fire certificates. That is a terrible situation, which no hon. Member would wish to continue. Since I moved an amendment in Committee on which the Government gave an undertaking that they accepted the principle, and as a result of which they have brought forward the new clause, a hotel has been closed in my constituency because it failed to measure up to the


requirements of the Act. It was unable to get the work done in time for this summer season, but I hope that the job will be completed in time for the season after, and I am sure that the measure, in the clause will provide an incentive and an encouragement for it in that task.
We do not know exactly how much money is needed to bring hotels up to the required standard. The industry's economic development council has conducted a survey of 1,200 of its members to find out the expenditure involved and to discover the problems. Although the survey is not complete, the council estimates that it could cost as much as £10,000 for a small hotel and substantially more for a larger one.
I hope that we shall be able to get through these problems without Government grants. It may be that we shall all have to reconsider the situation in a year's time, but at present it is best to leave everything to the workings of the clause and hope that we shall pull through.
The two amendments which stand in my name are not offered in any sense of dissatisfaction with the Government's gesture. They fill a not expensive hole, but a hole that needs filling. Only those hotels which have been inspected and certified will be eligible retrospectively to claim the tax. What is to happen to the hotels that were efficient and enterprising enough to carry out their structural alterations without officially approaching the authorities? The Hotels Restaurants and Caterers Association has evidence of hoteliers who have unofficially approached fire officers, avoiding the formal procedure of obtaining a certificate and thus avoiding the complications which arise for the hotels and the fire authorities.
The fire authorities do not have sufficient manpower to inspect all the hotels. Many of the hotels have gone ahead with alterations without contacting the authorities because the inspectors are not available. It would be wrong to limit the retrospective element to hotels that have done these things formally and it would be equally wrong to adopt that approach in the future. Any hotel which wishes to do the work without going through the whole panoply of inspection should be encouraged to do so, but the clause

would deny it the tax relief that it gives to others.
I thank the Government for the clause, therefore, which I hope will work substantially to improve fire precautions in hotels, but ask them to think again about my fairly minor amendment.

Mr. Peter Rees: Since the Financial Secretary was graceful enough to acknowledge that I played some small part in the debate on these matters in Committee I propose to intervene only briefly. The clause had a mixed parentage—the Financial Secretary, the hon. Member for Cornwall, North (Mr. Pardoe) and I all stand in something of a parental relationship to it, and I suppose that makes it an odd clause. Nevertheless, I hope that it will be welcomed by the hotel and boarding house keepers in my constituency. I hope that those who have been perhaps a little laggardly in meeting the fire precaution requirements will be encouraged by the clause.
Will the Financial Secretary say over what period depreciation will be allowed, and how long it will take to write down the cost of these improvements? I say that not in any grudging spirit, and in spite of anything I may say subsequently on Clause 5 I welcome unreservedly the retrospective element in the clause.
I support the amendment standing in the name of the hon. Member for Cornwall, North, which seems to have a great deal of good sense to commend it. I hope that the Financial Secretary will not stand too formally on the lines drawn up in the clause but will accept the amendment, which will provide an added stimulus for hotel and boarding house keepers to anticipate rather than to wait for the requirements of the Fire Precautions Act.

Mr. A. G. F. Hall-Davis: I first declare an interest as a director of a company which owns hotels, although perhaps not those which face the gravest problems from this legislation. I did not serve on the Standing Committee but I express my appreciation of the clause. The hotel industry, however, will still consider that it is less than it deserves. The background to the industry's complaints is that the Fire Precautions Act was introduced between legislation which gave comparatively generous grants for the extension of hotels


and legislation providing comparatively generous grants for the improvement of housing. The industry has always taken the view that expenditure to ensure safety of guests in hotels was as worthy of Exchequer support as expenditure to add to hotel accommodation or to improve domestic accommodation.
The scale of the burden has not been widely appreciated. Expenditure required from some small establishments under the requirements of the Fire Precautions Act is the equivalent of a year's gross receipts in those establishments. I have substantiated this, and to put the matter into perspective one has only to consider what would be the reaction to legislation which required the top 20 companies in Britain to incur within one or two years expenditure of hundreds of millions of pounds.
The small hotel keeper still faces the problem of finding the finance to undertake the work. I have no doubt that my hon. Friends raised this issue in Committee, but there is an unanswerable case for the Chancellor of the Exchequer discussing with the Governor of the Bank of England whether he could not indicate to the joint stock banks that expenditure to meet fire precaution requirements should come within a priority category of expenditure. We all know that the banks pay great attention to the Governor's indications on these matters. Judging from other categories which enjoy priority there seems to be an unanswerable case for extending that facility to expenditure on fire prevention.

Sir Anthony Meyer: In these days when written records are so very hard to come by and when it has been difficult for those of us not serving on a Standing Committee to know what is happening there, one of the functions of a debate like this is to bring home to our constituents and those interested in these matters the wholly welcome decision of the Government. The only point I make, and in it I support my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) and my hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis), is that, expenditure incurred on fire precaution will, in many instances, be considerably greater than total profits and often higher than total turnover. Therefore, I support the plea

which is made by my hon. and learned Friend the Member for Dover and Deal for a clear indication from the Government as to exactly how many years forward this expenditure may be rolled so as to be set off against future profits.

5.30 p.m.

Mr. Julian Ridsdale: I urged my own Government to do something more for the small hotel keeper and welcome the fact that in Opposition we have been able to press this amendment on the Government. I welcome the Government's action in helping small hotel keepers and guest house keepers.
First, I support what was asked by the lion. Member for Cornwall, North (Mr. Pardoe)—what about the hoteliers who have already done the job? Is anything going to be done for those people? Secondly, I echo what was said by my hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis)—namely that the banks should look favourably towards helping with the financing of this operation. I have no doubt that some of the small hotel keepers and guest house keepers are having difficulties in meeting the necessary finance.
It was a pleasure to walk into the Chamber and to find that the House had been converted to being prepared to give help to hotels and guest houses. It was more of a pleasure as we have not been able to read the records of what has been happening in Standing Committee.

Mr. Wyn Roberts: As a signatory to new Clause 7 and new Clause 31, and as I represent a predominantly tourist constituency, I greatly welcome the Government's new clause. It incorporates most of what I had in mind. It will be welcomed by hoteliers and boarding house keepers who are at the moment reeling from the effect of the high increases in their commercial rates. I had a letter only this morning from some hoteliers in my constituency strongly protesting against the increased rate. I am sure that the news of the contents of the new clause will help to alleviate their problem to some extent. It should also give new heart to hoteliers who were seriously wondering how they could survive and who were even considering giving up the business.
I am concerned about those hoteliers who anticipated the Act and who did a


great deal of work in that anticipation. should be grateful for consideration of that point from the Government Front Bench. I hope that just because of the new clause the fire authorities will not exert undue pressure on hoteliers to carry out their fire precaution works under the Act. Despite the clause, which is extremely favourable to them, there is, as my hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis) said, the general difficulty in the small hotel and boarding house business of obtaining finance for such works.

Mr. John Nott: I represent a tourist constituency and I was naturally delighted that my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) and not myself opposed amendments of this nature which were tabled by my colleagues when we were in office. I naturally welcome this significant measure of tax relief which will alleviate the financial burden on hoteliers and guest house keepers in meeting expenditure under the Fire Precautions (Loans) Act. It seems to be a novel concept which runs contrary to the broader rules that we have so far adopted on the industrial buildings allowance. This seems to be the first industrial buildings allowance for which 100 per cent. first-year write off is available.
I am also interested that we are financing for the first time, as far as I am aware, a 100 per cent. first-year write off to a particular statute. That may be a novel concept. I imagine that the Government will now wish to go ahead and grant a similar first-year write off for expenditure on safety at sports grounds and similar forms of expenditure. That would be a logical follow-up.
I have never been a purist. I consider that this measure is a rather ingenious way of getting round a difficult problem regarding the setting of new precedents. In retrospect, that which the previous administration offered to hoteliers proved inadequate and too narrowly based, and small guest house keepers and hoteliers are having a difficult time. That is particularly so this year. Many of them fixed their tariffs earlier in the year, not anticipating the high rate of inflation which has come about. This measure will be a significant help to them.
It is also true that the scale of expenditure involved in fire precautions is very large in relation to the amount of cash which a hotelier or guest house keeper generates. This is a novel, ingenious and interesting new tax measure which I do not think has any precedent. I welcome it and I am glad to see that the Government, in this sense, have been consistent in office in relation to what they said in Opposition. With this excellent precedent behind it I have no doubt that the Treasury Bench will go forward to introduce further measures which were advocated in Opposition.

Mr. Edward Gardner: Like my hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis), I have a special interest in the small hotel keeper and boarding house keeper, of whom there are hundreds along the Fylde coast in my constituency. Since the passage of the Fire Precaution [Loans] Act I have had a continual stream of letters from people who have found themselves unable to undertake the necessary capital expenditure to introduce the fire precautions that they were called upon to provide. They will welcome, as I do, the provisions in the new clause which give them tax relief.
I ask, in common with the hon. Member for Cornwall, North (Mr. Pardoe), that these allowances should be extended to hotels and other properties which adopted fire precautions before the operative date which is referred to in the clause. I further urge the Government to consider making as sure as can be that small hotel keepers and boarding house keepers who wish to raise loans and who have to do so if they are to pay for these works are given priority. This kind of work is essential, and the scale of expenditure involved for a small hotel is about £10,000, which could be more than the gross takings for a whole year.
I hope that it will not be necessary, but we may have to consider making grants to enable these small business people to carry out this expensive work. In the meantime, I hope that the tax relief that they will receive from the new clause will go some way towards encouraging them and making possible this essential work.

Mr. Richard Wainwright: I wish to speak briefly and solely to the amendment to the proposed new clause in the name of my right hon. and hon. Friends and myself which is set out on one of the dreadful pieces of paper which we are obliged to use—the insertion of "or written recommendation".
I endorse entirely the cogent argument of my hon. Friend the Member for Cornwall, North (Mr. Pardoe). My hon. Friend was responsible for the origin of the new clause which is the substance of the debate. I endorse all the arguments that he put forward in favour of the amendment relating to the hotel, boarding house and guest house industry. However, I shall try to take the House a little wider than that. I hope that before the House passes another full-scale Finance Bill we may extend the scope of the Fire Precautions [Loans] Act as it relates to other kinds of non-industrial buildings.
I am anxious that there should be no inadvertently disincentive effect to cause traders who use non-industrial buildings for their trade to defer fire precautions because they are awaiting a certificate under the clause. There is an urgent need in the older industrial parts of the country for ancient mills which are now used for non-industrial trading purposes to be properly adapted in the interests of safety. If firms who are operating in these buildings are advised by their accountants that they would be wise to defer precautions until orders are laid before the House to extend the Fire Precautions Act and until certificates are issued, there will be a positive and serious disincentive to take early fire precautions action.
There are two amendments proposed by my hon. Friends and they would go some way towards shortening the period of possible disincentive effect by cutting out the waiting period for a formal certificate and enabling the Inland Revenue to accept a written recommendation. I hope that the House will bear in mind that the clause has a potential scope far exceeding the hotel industry.

Mr. Robert Carr: In considering the amendments of which he is speaking, has the hon. Gentleman contemplated what happens in the case of a new building? Someone planning a new building could claim for a large amount of money and that would enable him to

spend much more on the building than he would have done otherwise. I cannot believe that that is the purpose of the amendment.

Mr. Wainwright: My hon. Friend the Member for Cornwall, North (Mr. Pardoe), who devised the first amendment, may wish to say something about that if he has an opportunity to do so.
I have a little experience in negotiating industrial building allowances with the Inland Revenue. An architect's certificate which certifies that designing a new building to comply with the Fire Precautions Act 1971 has cost a certain additional sum should be acceptable to the Inland Revenue in these enlightened and more permissive days if it is the serious purpose of the House to advance the cause of safety. I see no difficulty here, either for Ministers or for prospective Ministers of any Opposition party.
I do not think that the Financial Secretary will attempt to deny that there is an inadverent disincentive effect in insisting that only by waiting for bureaucracy to produce an official certificate shall a potentially enormous tax benefit be conferred. I hope that the Financial Secretary will consider the serious consequences to fire precautions in warehouses and other non-industrial buildings if he insists on taking a literal view.

5.45 p.m.

Dr. Gilbert: With the leave of the House, I will attempt to answer the questions which have been asked. The compliments which have been paid to the Treasury Bench almost cause us to blush. It is a pleasant change from the atmosphere which prevailed in the Chamber not long ago. I just shows how sensibly we conduct our affairs when we consider Finance Bills in the House. I wonder, however, whether we should be quite so forthcoming. The making of a concession has been followed by a dozen speeches from the Opposition benches—but I do recognise, of course, that all who have spoken have a serious constituency interest and also the wider national interest in mind.
I understand the point put by the hon. Member for Morecambe and Lonsdale (Mr. Hall-Davies) and several of his hon. Friends about finance, and I will convey his constructive suggestion to my right


hon. Friend the Chancellor of the Exchequer.
The hon. and learned Member for Dover and Deal (Mr. Rees) asked for how long the relief would be available. I am advised that it can be rolled forward indefinitely to be set against future profits.

Mr. Peter Rees: I could not have made myself clear. I know that if a trader cannot absorb the capital allowance in a year he can carry it forward to the next year, but over what period are the improvements to be depreciated for capital allowance purposes?

Dr. Gilbert: I am informed that they can be rolled forward indefinitely until they have been exhausted.

Mr. William Clark: With plant and machinery it is possible to have full depreciation in the first year. If the company does not take advantage of that and writes off only 50 per cent., whatever is left is subjected to the normal rate of depreciation, wear and tear allowance or capital allowance for that particular type of machinery. Is the Financial Secretary saying that the concession on fire precautions is true free depreciation, in that it is up to the hotelier to write off so much in the first year, so much in the second and so on, or is he saying that if the fire precautions cost £10,000 and the hotelier makes a profit of £4,000 he writes of £4,000 in the first year, £3,000 in the next year, and so on, depending on his profitability?

Dr. Gilbert: If I understand him correctly, the hon. Member for Croydon, South (Mr. Clark) was right the first time. The 100 per cent. allowance is available in the first year. If it is not used in the first year the normal rules apply and it may be carried forward indefinitely.

Mr. Clark: At what rate of relief can the hotelier write off the balance of 10 per cent., 20 per cent. or whatever it is?

Dr. Gilbert: He can take 100 per cent. in the first year. If he does not take 100 per cent. in the first year, the balance can be written down at 25 per cent. per annum on a reducing basis. It is available indefinitely until the full amount is exhausted.
The hon. Member for Christchurch and Lymington (Mr. Adley) asked whether the words were intended to cover hotels and boarding houses, and I give him that assurance.
The hon. Member for St. Ives (Mr. Nott) was good enough to compliment Treasury officials on their ingenuity in devising the clause. In parenthesis he raised the relevance of these matters to sports grounds. I am happy to tell him that if and when the Safety of Sports Grounds Bill is enacted, we intend to apply provisions of this sort to sports grounds in precisely the same way as to hotels and boarding houses.
The hon. Member for Colne Valley (Mr. Wainwright) made an extremely significant point in connection with the Liberal amendment. I am sure he recognises that the amendment goes wider than is the Government's intention. His hon. Friend the Member for Cornwall, North (Mr.Pardoe) recognised that the clause was the right way in which to proceed at this stage. I understand the suggestion of the hon. Member for Colne Valley that there might be an unintentional disincentive effect in the clause and I should like to look at it again. If there is no dramatic political change in the next few months, another Finance Bill may be presented before the year is out, and that might be the appropriate time at which to consider the point.
The Liberal amendment bypasses the provisions of the Fire Precautions Act and we should be reluctant that that should happen. The amendment, as drafted, has the effect, though possibly not intentionally, of widening relief to cover extensions rather than alterations, which is the purpose of new Clause 10.
I hope that the hon. Member for Cornwall, North will accept that new Clause 10 is a considerable step forward. It gives retrospective relief to everybody who has been served with an order by a fire authority. Therefore, it is a considerable benefit. If we find that further progress is needed at a later stage, our minds are not closed to any such suggestion. I hope that the clause will commend itself to the House since it takes the matter as far as we can reasonably go. As for the substance of the Liberal amendment


which has technical defects, questions arising from it might be considered at a later stage.

Mr. Pardoe: Before the Minister completes his remarks, can he say what he intends to do'? He said that he will look at the matter at a later stage or in some months' time. I accept that amendment would cover new hotels, and there may be reasons why the Treasury do not wish to go along with the proposal. Will the hon. Gentleman undertake to bring in in another place an amendment which limits the provision to existing hotels? There is no need to stand by the bureaucracy in respect of the Fire Precautions Act since it is possible to take action on the basis of a written recommendation. I am not saying that I do not take the amendment seriously or that I would not press it to a vote.

Mr. R. Carr: I thought the hon. Member for Cornwall, North (Mr. Pardoe) was proposing another fundamental amendment—namely, that another place was suddenly to be given power to amend the Finance Bill. No doubt if we sought to proceed on those lines it would occupy the House of Commons for many hours.
I should like to say how much we welcome the new clause and, as an ex-Horne Secretary, I feel deeply about the need to do everything we can to speed up the implementation of the Fire Precautions Act. We took legislative power to enable hotels to be given loans. We knew that we would have to watch how the situation went and, having seen what has happened, I believe that some other fillip is needed to assist hotels and boarding houses to implement the Act. Therefore we welcome the new Clause. I am glad that, with the help of hon. Members on both sides of the House, our efforts have been rewarded in this way.
I cannot advise my hon. Friends to vote for the amendment. I see its point and I have considerable sympathy with it but, as drafted, it goes very wide. Surely the right course is that proposed by the Financial Secretary. The hon. Gentleman said that he, too, saw the point of the amendment. Therefore, I believe that we should accept the new clause with gratitude and watch how the situation goes between now and the next Finance Bill. I

assure the House that when we introduce that Bill, we shall have given the matter a great deal of thought.

Dr. Gilbert: I thank the right hon. Gentleman for his constructive remarks. I did not mean to suggest that the hon. Member for Cornwall, North (Mr. Pardoe) was not taking the amendment seriously. There are implications for all sorts of new buildings as the ramifications of the Fire Precautions Act are extended in future years. We feel that the need for relief is greatest in regard to hotels and boarding houses. I assure the hon. Gentleman that we do not look at this matter with closed minds. We recognise a need, and that is why the new clause was introduced. I hope he will accept that it is a reasonable way in which to proceed.

Mr. Pardoe: rose—

Mr. Deputy Speaker: (Mr. George Thomas): The hon. Member for Cornwall, North, has exhausted his right to speak. I understand that he does not wish to move Amendment No. 108.

Mr. Pardoe: That is correct, Mr. Deputy Speaker.

Question put and agreed to.

Clause accordingly read a Second time and added to the Bill.

New Clause 8

PARTNERSHIP RETIREMENT ANNUITIES

(1) Where a person (in this section referred to as the former partner) has ceased to be a member of a partnership on retirement, because of age or ill-health or on death and, under—

(a) the partnership agreement; or
(b) an agreement replacing the partnership agreement or supplementing it or supplementing an agreement replacing it; or
(c) an agreement made with an individual who acquires the whole or part of the business carried on by the partnership;
annual payments are made for the benefit of the former partner or his widow or a dependent of his and are for the purposes of income tax income of the person for whose benefit they are made, the payments shall be treated as earned income of that person, except to the extent that they exceed the limit specified in subsection (2) below, and shall not reduce the income which is chargeable as investment income of any other person.

(2) The limit mentioned in subsection (1) above is 50 per cent. of the average of the amounts which, in the best three of the relevant years of assessment, were the former


partner's shares of the relevant profits or gains; and for this purpose—

(a) the former partner's share in any year of the relevant profits or gains is so much of the relevant profits or gains as fell to be included in a return of his income for that year; and
(b) the relevant profits or gains are the profits or gains of any trade, profession or vocation on which the partnership or any other partnership of which the former partner was a member was assessed to income tax; and
(c) the relevant years of assessment are the last seven years of assessment in which he was required to devote substantially the whole of his time to acting as a partner in the partnership or those partnerships; and
(d) the best three of the relevant years of assessment are those three of them in which the amounts of his shares of the relevant profits were highest;
but where, in any of the relevant years, the circumstances were such that any of the profits or gains of a partnership were not assessable to income tax, paragraphs (a), (b) and (d) above shall apply as they would apply had those profits or gains been so assessable.—[Dr. Gilbert.]

Brought up, and read the First time.

Dr. Gilbert: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: It will be convenient to take also new Clause No. 28.—(Earned income).

Dr. Gilbert: The effect of the clause is to provide that annual payments made by the continuing members of a partnership to a former partner who has retired because of age or ill-health shall be treated as earned income in the hands of that retired partner. Similarly the House will be glad to learn that the effect of the clause is that annual payments to the widow or dependants of a former partner will also be treated as earned income.
The clause gives effect to an undertaking which I gave in Standing Committee. I shall not seek to detain the House for long in discussing its effect. However, I should point out that it is somewhat more restrictive than is new Clause 28 which we are debating at the same time and which is in the name of the hon. Member for Croydon, South (Mr. Clark). First, there is a limit on the amount of annuity which will qualify as earned income of the retired partner under our proposals. The limit is related to the partner's share of the profits in the last seven years of which he acted as a full-

time partner, and is confined to 50 per cent. of the average of the partner's share in the best three of those seven years. This is a somewhat convoluted formula, but we thought it right to try to get a formula which would provide a picture of the average spread over a period of years, taking good years and bad years. The option is available to partners to select the best years, taking the mean figure.
I recognise that it could be said that the relief is self-policing since any annuity paid by a continuing partner is paid out of his own pocket rather than as compensation paid from corporate funds. On the other hand, we thought it right to have a limit in the clause. I do not think it is likely to bite very hard on the situation and the House will agree that it is a moderate proposal.
The second difference is that the retirement annuity, although ranking as a deduction from the continuing partner's earned income up to the highest rate of earned income, will not rank for investment income surcharge. This is to preserve a certain symmetry because if the annuity to the retired partner is to be regarded as earned income in his hands, we consider it appropriate that the relief should relate only to the earned income of the continuing partners. I hope the House will regard those two minor constraints as reasonable and will accept the clause in the spirit in which it is moved.

6.0 p.m.

Mr. William Clark: I am grateful to the Financial Secretary for fulfilling the undertaking that he gave in Committee on a similar new clause.
I accept the constraints that the hon. Gentleman has put on partnership annuity. I think that this course will be welcomed by ex-partners and by widows of ex-partners of professional firms. Even with the constraints, I think that the new clause will remove an injustice and anomaly in our tax system.
It always struck me as odd that a self-employed person may not take advantage of the 1956 Act to pay for a self-employed pension. Many partners retire not having been able to build up a pension fund for themselves. To a certain extent the clause has removed the anomaly. I welcome it and am grateful to the Financial Secretary for bringing it


forward. I hope that the other new clauses will show the same generosity.
I am sure that the Financial Secretary will agree that in Committee upstairs the Opposition put forward constructive suggestions to a hastily produced Finance Bill. I am delighted that the Chancellor of the Exchequer and his colleagues have seen fit to accept many of our representations and to admit, as they have, that the Opposition as a team did very constructive work on a hastily prepared Finance Bill.

Mr. Nott: I am sure that, without having read the proceedings in Committee upstairs, what my hon. Friend the Member for Croydon, South (Mr. Clark) said does not need any proof. I believe that the Opposition put up an admirable show in Committee.
I welcome the clause. It is helpful. I want to make only one minor point, and I do not mind if the Financial Secretary does not reply to it.
I am in favour of a limit. The Financial Secretary said that this could be a self-policing matter, because the existing partners would not wish to pay out exaggerated sums to a retired partner. But I do not think that 50 per cent. is quite up to the norm which would be allowed in company pension schemes. Is it not below what an employee would receive as earned income under a normal company pension scheme? I realise that company tax arrangements on retirement pensions are complicated. I merely make the point that to say that 50 per cent., which is the average of the best three years, of pension or retirement income is to be taxed as investment income seems rather harsher as a limit than the limit for people who retire with company pension schemes. The limit which would be allowed by the Revenue in company pension schemes as a rough generalisation would be two-thirds of the final year's salary.

Mr. William Clark: As I read the clause—I hope that the Financial Secretary will clear any doubts that I have in mind—I understand that the 50 per cent. pension is based on the profits of the last seven years, taking three years as an average. That will determine the amount of annuity that is paid either to an ex-partner or to his widow.
Perhaps I may give my hon. Friend an example. If the best three years represent £6,000, the average is £2,000 over those three years, and the Exchequer is suggesting that £1,000 of that annuity will be treated as earned income. However, it does not necessarily follow that, because a partner enjoyed his full percentage of profits, after he retires he will enjoy the same percentage of profits. I think that 50 per cent. is a step in the right direction. It is not analogous to the two-thirds pension scheme applicable to an employee.

Mr. Nott: It may not be. I thank my hon. Friend for his guidance. It is not wholly clear to me. I was interested to know what the Financial Secretary would say about it. I should like to know whether it conforms broadly with what an employee would receive under a company pension scheme in terms of earned income. I welcome the clause. I think that my hon. Friend has done a good job in pressing the matter.

Mr. Peter Rees: I welcome the principle underlying this long-overdue measure of reform. I gladly pay tribute to the Financial Secretary for so flexibly accepting the representations made to him by the Opposition in Committee upstairs.
I intervene in the hope that the Financial Secretary will be able to clarify two points.
First, the payment that qualifies for earned income relief has to be made under

"(a) the partnership agreement; or
(b) an agreement replacing the partnership agreement or supplementing it or supplementing an agreement replacing it; or
(c) an agreement made with an individual who acquires the whole or part of the business carried on by the partnership."
As the House knows, if a partnership takes in one, two, three or four new partners, strictly speaking a new partnership is constituted. Does it follow that if the partners enter into a partnership agreement, possibly supplementing that regulating the relationship between the former partners, it will be regarded as an agreement replacing the original partnership agreement under subsection (1)(b)? The only doubt in my mind is that paragraph (c) seems to be limited to to
an agreement made with an individual who acquires the whole or part of the business carried on by the partnership".


There is a slight area of doubt there which I am sure the Financial Secretary will be able to clarify. I want to make certain that if one or more new partners is or are taken into a partnership after the retirement of the partner who is claiming earned income relief, whatever agreement may regulate the relationship of that new partnership—because in law it is a new partnership—the agreement will qualify under subsection (1).
Secondly—we have talked about symmetry, and so on—I am a little perplexed about the wording of subsection (1) which provides that the annuity
shall not reduce the income which is chargeable as investment income of any other person.
I take it that it is not to count as a deduction where the partnership income for a year is not sufficient to support the annuity paid to a retired partner. Do I take it that the continuing partners cannot claim to deduct that annuity for tax purposes from their other income, or can they claim to deduct the excess from their next year's earned income, and so on? I am sure the hon. Gentleman will appreciate that there is a slight area of doubt there and it will be for the convenience of the House if he can clarify it.

Mr. David Howell: I think that the House is agreed that the clause is a step in the right direction. We welcome it. As the Financial Secretary said, this matter arose at a very late hour in the evening or early hour in the morning when he indicated that he was prepared to make a concession in the form of a new clause. The clause sets right a longstanding anomaly.
My hon. Friend the Member for Croydon, South (Mr. Clark) and my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) have made certain points which I hope the Financial Secretary will be able to clarify. The inclusion of the clause in the Bill will mean that ex-partners, solicitors, accountants and professional people, who hitherto have been penalised, will now enjoy earned income relief and have their pensions treated to a certain extent as earned income. At a time when the professional and middle income groups are under attack by this Government, it is refreshing to see this little ray of sunshine in an otherwise dark sky of hostility towards people in such

professions. On that ground we welcome the clause.

Dr. Gilbert: I am glad to recognise the tribute paid by the hon. Member for Croydon, South (Mr. Clark) when he says that when he puts forward constructive amendments and there is a reasonable Government in office those amendments are adopted, and that when there is an unreasonable Government in office he can batter his head against the wall indefinitely and make no progress. I would not describe all the amendments and new clauses put forward by him and his hon. Friends in Committee upstairs as being constructive. Some verged on the idiotic. We shall come to that matter later, no doubt. At this stage, we can agree upon the merits of the new clause.
The hon. Member for St. Ives (Mr. Nott) asked some questions about the 50 per cent. limit. He is right to say that there are certain circumstances in which a controlling director may, under an improved superannuation scheme, receive a pension of up to two-thirds of his salary. We considered whether the same figure would be appropriate for these provisions. However, we bore in mind the fact that the rules that are operated administratively by the Superannuation Funds Office require that the amount of pension a controlling director may receive under an approved scheme is restricted to take account of any other annuity he may receive under a retirement annuity contract. There is no such restriction on retirement annuity contracts under these proposals. Therefore, we thought it reasonable to have a somewhat lower limit. I think it unlikely that it will bite frequently.
The answer to the first question asked by the hon. and learned Member for Dover and Deal (Mr. Rees) is that where there is a replacement partnership the situation is as he understood it. The answer to the hon. and learned Gentleman's second question is that if there are insufficient profits in any one year it would not be a question of offsetting the annuity against any other income; it would constitute a loss for the partnership which could be carried forward to future years.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 1

TRADE UNIONS

'(1) In section 338 of the Taxes Act (exemption for trade unions)—

(a) references to a registered trade union shall be construed as including references to a trade union entered in the list of trade unions maintained under the Trade Union and Labour Relations Act 1974; and
(b) in subsection (2) (definition of "provident benefits" by reference to registered rules) the word "registered" shall be omitted.

(2) Section 123(2) of the Finance Act 1972 (which restricts the exemption conferred by section 338 of the Taxes Act) shall cease to have effect.'—[Mr. Joel Barnett.]

Brought up, and read the First time.

The Chief Secretary to the Treasury (Mr. Joel Barnett): I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With the new clause we are to discuss Government Amendments Nos. 58A and 58B.

Mr. Barnett: The object of the clause is to provide that trade unions entered in the list to be maintained under the Trade Union and Labour Relations Bill, which is at present passing through Parliament, will be entitled to provident benefit income relief under Section 338 of the Income and Corporation Taxes Act 1970. It has no retrospective effect, and will operate from the enactment of the Trade Union and Labour Relations Bill.
As the law stands, "registered trade unions" are entitled to provident benefit relief under Section 338. Until 1971 the term "registered trade unions" covered unions registered under the Trade Union Acts. Those Acts were repealed for Great Britain by the Industrial Relations Act 1971. The word "registered" then denoted entry on the register maintained under that Act. That register, together with the Act, is now being repealed by the Trade Union and Labour Relations Bill. Thereafter, outside Northern Ireland, where the Trade Union Acts will still apply, there will be no meaning to the words "registered trade union", and no peg on which the relief can hang. That is why the other two amendments, No. 58A and No. 58B are required.
The Trade Union and Labour Relations Bill provides for trade unions to be entered on a list maintained under that

measure. Under the clause, "listed" unions will be regarded as registered for the purposes of the tax relief. As the clause is needed merely as a matter of mechanics, I hope that it will be acceptable to the House, as I know it is to the right hon. Member for Carshalton (Mr. Carr), who never intended that such relief should be withdrawn.
It will be well known to the House that the provident benefits include payments, under the registered rules of the union, to a member during sickness or incapacity from personal injury while out of work—this does not include strike pay or lockout pay; to a member by way of superannuation; to a member who has met with an accident; to a member who has lost his tools by fire or theft; and payment of funeral expenses on the death of a member or his wife or as provision for the children of a deceased member. I am sure that it is acceptable to the House, as it was for a very long time, that all those benefits should be eligible for tax relief.
As we have had long debates on these matters, perhaps I may leave it at that.

Mr. R. Carr: The Opposition have no objection to the clause. Indeed, we are happy to see it go through in this form, given the wider context in which it is introduced.
The Government have been very sensible to resile from the original desire to make the provision retrospective, and I welcome the fact that they have bowed to the decision of the House when we discussed their original new Clause 4. I am grateful to them for taking that view.

Question put and agreed to.

Clause read a Second tune and added to the Bill.

New Clause 9

EXPENSES ALLOWANCES TO DIRECTORS AND OTHERS

'Section 198(3) of the Taxes Act shall have effect for the year 1975–76 and subsequent years of assessment as if for the references to £2,000 there were substituted references to £5,000'.—[Dr. Gilbert.]

Brought up, and read the First time.

6.15 p.m.

Dr. Gilbert: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this new Clause we are to discuss new Clause 15—Expenses returns [P 11 D].

Dr. Gilbert: The effect of the clause is that the special legislation relating to taxation of expenses allowances and benefits in kind will, for the tax year 1975–76 and subsequent years, apply to employees whose earnings, including expenses and benefits in kind, are at the rate of £5,000 a year or more rather than £2.000 a year as at present.

Mr. Brian Sedgemore: On a point of order, Mr. Deputy Speaker. Can you help the House in the matter of the selection of the clause? In the Committee. of which I was a member, a similar clause was tabled by the hon. Member for Worthing (Mr. Higgins) and some of his hon. Friends. They sought leave to withdraw it, but were refused. and the clause was emphatically voted down by the Committee. In those circumstances. I wonder why the Chair has selected an amendment which hon. Members have shown they do not want.

Mr. Deputy Speaker: Mr. Speaker has discretion in the selection of amendments. In its wisdom, the House does not require him to explain why he selects any amendment.

Mr. Sedgemore: Further to that point of order. Are we not entitled to expect Mr. Speaker to protect back benchers from the tyranny of the two Front Benches when the matter has clearly been debated and decided in Committee?

Mr. Deputy Speaker: There is no need for us to spend much time on this matter. There is plenty of other business before us. The position is quite clear. Mr. Speaker has discretion, and he has exercised it. The House gave him the discretion, and now we had better accept his judgment.

Dr. Gilbert: I think that in a moment can come to some of the points that are legitimately concerning my hon. Friend the Member for Luton, West (Mr. Sedgemore). My hon. Friend the Chief Secretary and I gave assurances in Committee that we would introduce on Report a new Clause with the effect of new

Clause 9, and we are honouring that commitment.
The effect is to raise the limit for employees from £2,000 a year to £5,000 a year. For directors, however, the present legislation will continue to apply, irrespective of the level of their earnings.
I refer briefly to new Clause 15, tabled by the hon. Member for Basingstoke (Mr. Mitchell) and two of his hon. Friends. The hon. Gentleman will see that the Government's clause has the same effect as his. I hope that he will accept our's as the best way to proceed in this matter.
The £2,000 limit was fixed as long ago as 1948. Originally, we considered whether to introduce a clause of this kind ab initio. We recognised the need to raise the limit because of the quite unnecessary administrative complications involved for companies of all kinds and the fact that it operated below the average industrial wage.
Having said that, I hope that my hon. Friend the Member for Luton, West (Mr. Sedgemore) will accept my assurance that we are not to be taken as agreeing that the increase in the limit from £2,000 to £5,000 leaves the law in a satisfactory state. The previous Government were undertaking a review of benefits in kind. We are undertaking just such a review ourselves. If, on consideration, we think it proper that, irrespective of the level of his earnings, an employee should be taxed on certain benefits which after all are only another form of remuneration, we shall have no hesitation in introducing the necessary amendments to the law for the House to consider and, we hope, to bring into effect. It is not our intention to open the way to large-scale tax avoidance through payments in kind rather than payments in cash or by cheque.
I hope that that makes the position clear to my hon. Friend the Member for Luton, West. We would have preferred to introduce the results of our review of benefits in kind and the substantive amendment that we make in new Clause 9 simultaneously. However, circumstances did not work out conveniently enough to enable us to do that. In any event, I do not think that any harm will come from taking this clause first, and I assure my hon. Friend that we are proceeding with our review with all dispatch.

Mr. David Mitchell: I welcome the new clause and the fact that the Government have tabled it in the form that they have. It is very similar to new Clause 15 which I and a number of my hon. Friends who are interested in the problems of small businesses—in which I declare an interest—sought to move. The Government are to be congratulated on having brought the matter forward themselves. As I understand it, the clause makes no change in the taxable position of the persons concerned, but it removes a substantial load from the shoulders of company secretaries and others who have to sign returns annually. The clause is particularly welcome for that reason.

Mr. Michael Latham: I wish to associate myself with my hon. Friend and cousin the Member for Basingstoke (Mr. Mitchell) regarding the P11D change which is now before the House. This new clause gives me a degree of personal pleasure.
To my certain knowledge a proposal of this kind has been put forward every year by the National Federation of Building Trades Employers, with which I was associated before coming to this House, in its Budget representations since 1967. I have always said that on the first occasion on which a proposal is put forward it is said to be impossible, on the second occasion it is said to be difficult, on the third that it is worthy of consideration, and on the fourth or fifth it is accepted. I therefore say to organisations outside this House, "Whenever you put forward representations to successive Chancellors of the Exchequer, keep trying. One day, you may win."

Mr. Sedgemore: I make no apology for saying that I regret that the Chancellor of the Exchequer has tabled this amendment, which flies in the face of the decision of the Committee and in the face of every single Government supporter who served on that Committee, including my hon. Friends the Chief Secretary and the Financial Secretary. It seems odd that a provision of this kind should be introduced before the results of the Government's general review are known, and it was made clear in Committee that it was the Will of the Committee that an amendment of this kind should not be moved by the Government on Report.
All lawyers know that design and calculation are entirely different. I accept that it may not be the Government's design that payments in kind should replace increments in salaries or wages. However, it seems to me that the clause is calculated to do that and that people who try to use it will do so easily. We know that the accountancy profession will help people to use it in that fashion.
There are of course exceptions in the accountancy profession, some of whom sit on the Treasury Bench today, but it seems difficult to invite millions of workers to accept restraint when we are introducing such a clause. To some extent, it sums up the rank hypocrisy with which we approach different sections of our society. Apparently, even we find it difficult to take the right decisions in these matters.

Mr. Terence Higgins: The Opposition welcome the amendment, which is in conformity with the undertaking given in Committee. We acknowledge that the Government have carried out their promise. It was in the light of that that my right hon. Friend the Member for Carshalton (Mr. Carr) and I decided that it would be inappropriate to vote on this issue, and I am sure that it is right that the Government should have taken the eminently sensible view that they have. We understand that they are carrying out a broader review, but the clause will result in considerable administrative savings, and that is a situation towards which we ought to work. It is wrong to suppose that there are not some members of trade unions who will benefit from the change. In view of that, it cannot be regarded as a partisan measure.

Mr. Gwilym Roberts: I support the doubts expressed so ably by my hon. Friend the Member for Luton, West (Mr. Sedgemore) about the introduction of this clause on Report. I accept the Financial Secretary's remark that it may not open the door to the use of benefits in kind and to large-scale tax avoidance, but there is no doubt that the feeling amongst rank and file trade unionists will be that the door is being opened by a provision of this kind.
If there was any need for such a provision, in my view it would have been wiser to have delayed it till after the completion of the general review of payments


in kind. I feel strongly that ordinary workers on the shop floor will be worried when they see a move upwards in the limit of 150 per cent., and that they will want to know who will be cashing in on it. It may not happen, but it is very unwise in industrial relations terms to put such a provision on the statute book at this stage.

6.30 p.m.

Dr. Gilbert: I believe I can set my hon. Friends' very legitimate concern at rest on two points. My hon. Friend the Member for Luton, West (Mr. Sedgemore) suggested that my hon. Friend the Chief Secretary and I voted against such a clause in Standing Committee and were bringing the same clause to the House now on Report. In fairness to my hon. Friend and myself, this is not precisely the case.
In Standing Committee we were voting against a different clause. That clause in Committee—and this is a very important point—sought to make relief available with respect to the current tax year, and this was for the Revenue administratively absolutely impossible. The clause we are now putting forward is one which my hon. Friend and I then undertook to bring forward with regard to future tax years. That is the difference between the two, and we have been in no way inconsistent in what we said in Committee and now on this matter.
My hon. Friend the Member for Cannock (Mr. Roberts) expressed fears about the growth of tax avoidance through this clause. It makes no change whatsoever under tax law to the liability for tax of any individual. It really relates to the reporting requirements of firms to the Revenue. My hon. Friend says he fears that tax avoidance may open up as a result of this new clause. I can only give him an assurance that we are prosecuting this review of benefits in kind with great diligence and thoroughness. If there should be a General Election before October and we win it there will not be any extension of tax abuse in this matter. If we do not win the election it will be beyond my hon. Friend's power and mine to do anything about it.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 14

MITIGATION OF CORPORATION TAX LIABILITY OF SMALL COMPANIES

"For any financial year after 1972 for references to the amount of £15,000 and £25,000 in section 95(3)(a) of the Finance Act 1972 there shall be substituted the amounts of £25,000 and £40,000 and for reference to the amounts of £15,000 and £25,000 in section 95(3)(b) of the same Act there shall be substituted the amounts of £25,000 and of £40,000".

Brought up, and read the First time.

Mr. David Mitchell: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this new clause we may also discuss new clauses 17 to 23, all of which are headed:
Mitigation of corporation tax liability of small businesses".

Mr. Mitchell: I shall explain why so many clauses having a similar purpose appear on the Order Paper. The purpose is to raise the narrow limit of companies entitled to small business relief from corporation tax. Before going further, may I declare an interest? Before I came into the House I was engaged full-time in the work of a small business and its management. I have a continuing interest there, and this enables me to bring to the House some experience of the troubles which affect this field of the business community.
On this occasion, however, we are not dealing with the question of very small companies; we shall be debating their problems later this evening or tomorrow. Here we are dealing with companies whose annual profits are £15,000 or more. In this context I should explain the word "profit", because so many people seem to think that this is cash left over in the kitty at the end of the company's financial year and available for dishing round to directors for Rolls-Royces, yachts in the South of France, and so on, whereas the reality is that in most companies this money will be tied up in stock, work in progress and partly manufactured goods which may be going to export. Tied up in this, too, is money owed by customers to the company. It is not what so many people imagine profit to be, cash available; it shows itself in a whole series of ways in which it is incorporated into the working capital of the business.
I pray in aid of the case that I am about to make to the Committee what was said by the hon. Member for Heywood and Royton (Mr. Barnett)—now Chief Secretary to the Treasury—during the course of the Committee stage of the Finance Bill in 1972, of a similar amendment which I tabled at that time. The hon. Member said:
I entirely endorse all that the hon. Gentleman said about the difficulties which will be created for close companies of the better type, those who seek to reinvest and plough back their profits but who will now be faced with a 25 per cent. increase in their tax bill."—[OFFICIAL REPORT, Standing Committee E, 26th June 1972; c. 1492.]
The hon. Gentleman will know, as I unfold the argument to him this afternoon, that I am talking about those very companies which he and I agreed at that time—although I was not then successful in persuading some of my hon. Friends—should have a rather different form of tax treatment. These are companies which are big enough to make a useful contribution to production in the national economy, and, particularly, they are suppliers to other industries of parts which are required in assembly work and things of that kind. These companies are not big enough to be quoted on the Stock Exchange, or somewhere of that kind, and are therefore companies which are financed principally out of retained profits.
The Bolton Committee, in its examination of the problems of small businesses, indicated almost as a criterion that they were businesses which financed themselves and their expansion and growth out of their own cash flow. Some people may say, "Yes, and also from bank overdrafts," but there is a severe limit on the availability of bank finance for fast growing companies, because a bank will say, "Yes, we are very ready to lend money to the small business sector, provided it is credit-worthy." That sounds very good, simple and straightforward, until one plunges into the reality of what a bank means by "credit-worthy". It means a company that will be able to repay the borrowed money in cash within about three years. The kind of credit-worthy company that a bank is interested in is the one that has to stock up with material for a busy season of the year—perhaps the Christmas or summer trade—and

which, when it has sold those goods, have the cash back in its pocket and be able to repay the bank overdraft.
What a bank is not interested in is long-term risk capital—the kind of situation where, if a bank manager asks in three years' time, "I would like the money back", he has to be told, "We are sorry but it is tied up in machinery, equipment or work in progress, and there is no cash available." The irony of it is that those companies which are the fastest growing and have the greatest contribution to make to the national economy are just those which, in the eyes of the banking community, are not credit-worthy in this context.
There is a direct link between retained profits amongst these businesses and the means of expanding their businesses, resources for export orders or business of that kind, and—I am sure that here I shall have the support of the Chief Secretary—the very important employment aspect of the problem, as the country moves towards a period in which all the forecasters say there may be a threat of rising unemployment, remembering that one-third of all persons employed outside the public sector are engaged in the small business field.
I had an example today of the kind of case I have been trying to make. I was talking to the general manager of a company which makes advanced electronic equipment. He told me that although he has the opportunity of acquiring substantial export orders he cannot accept more orders because he cannot finance the work in progress and the stock which would be required to fulfil those orders. This manufacturer is a supplier of specialised advanced electronic equipment which goes into much bigger export orders and production units. Therefore, a much larger field than the opportunities of expansion for this business on its own are placed in jeopardy.
Here we have a sector of the business world which is being starved of adequate expansion finance. It is not big enough to go to the market, because it would be clobbered at 52 per cent.—the rate for corporation tax. I shall have the support of the hon. Member for Heywood and Royton in this respect because it is part of the problem which arose from the introduction of the imputation


system of corporation tax. I do not quarrel with that system in principle, but it is designed to ensure that businesses which have surplus money distribute it, and shareholders then reinvest the money through the Stock Exchange, so that there is a reallocation from what has been described as the fat to the dynamic.
There is a re-allocation of national resources to the companies which are growing and most need those resources. I do not dispute the logic of my right hon. Friend the Member for Altrincham and Sale (Mr. Barber), who introduced the imputation tax system. I do not disagree with the logic which I have no doubt my hon. Friend on the Front Bench will use tonight. It is right that there should be such a system for quoted companies which use the market. But it breaks down when it is used for companies which do not acquire their finance through the market. We have to ask where the cut-off should be. When my right hon. Friend was Chancellor he introduced small business relief up to £15,000, graded off to £25,000.
That may take care of the tiddlers—the smallest of companies—but what is to happen to those in the gap between them and the company that is big enough to go to the Stock Exchange to raise its finance? This question has not been satisfactorily answered. This is where the shoe pinches. This is where the trouble is today. These are the companies which will contribute so much more if they are allowed to retain more of their profits as working capital. I have therefore tabled a series of clauses. I hope that the Chancellor will consider the logic of taking this provision right up to the size at which a company can be quoted on the Stock Exchange. That is the logical point.
If logic cannot prevail in these matters and there are financial restrictions and restraints, there is a series of clauses from which the Government can choose. I should explain why there is a series of clauses. It is simply that, eight days ago, I tabled a Written Question to the Treasury asking for the figures showing the cost of raising small business relief to a series of levels.
It has taken the Treasury until lunchtime today to produce the answer. The Question was down for answer on Thursday of last week. I was grateful to the

Treasury for its co-operation in telling me that it was not able to provide the figures by then. It is an interesting sidelight on the interest of the Government in the problems of small businesses that these figures were not immediately at hand and had not been thoroughly thumbed over by the Chancellor when he was preparing his Budget measures earlier this year.
New Clause 14 raises the limits from £15,000 to £25,000, graded off to £40,000. It would cost £15 million in a full year. New Clause 17 would cost £40 million; new Clause 18 only £10 million; new Clause 19, £15 million; new Clause 20, £20 million taking it up to £30 million, graded off to £40,000. New Clause 21 would cost £30 million. I have no doubt that the Chancellor has the answer to the other clauses.
I would have preferred to see a figure with an increase from £15,000 to £30,000, graded off to £50,000, which would cost £25 million. It so happens that, in putting forward this spread of alternatives, when I got the answer from the Treasury today this was almost the only figure in the spread which was not actually tabled as a separate amendment. For those reasons I hope that the Chief Secretary will accept one of these clauses, preferably the most generous one in view of the advantage which the economy would derive from giving the opportunity to expand to the smaller traders of this country who are now restricted by a lack of working capital.

6.45 p.m.

Mr. Robert Redmond: It will not have escaped the notice of my hon. Friends that we are debating small businesses, again with much the usual sort of attendance on the Labour benches. I have been very glad to hear my hon. Friend the Member for Basingstoke (Mr. Mitchell) feeling so confident that the Government are bound to accept one of these clauses. I agree it is obvious that they must. There are one or two additional points not made by my hon. Friend which are relevant.
In the past month or two we have heard a great deal about the amount of money the Government are paying industry. If that is so—I do not accept the argument—it would be agreed that by and large the State aid goes to big business. It is the small businesses which


are finding the money. This clause goes some way towards redressing the balance. There is an additional purpose behind this clause, certainly one that I had in mind when I put my name to it. It has to do with the fact that father, if I may call him that—the proprietor of the business—is often locked into it.
It makes it extremely difficult for future expansion to take place, because as father grows older the steam goes out of the concern. There are fewer new designs coming on to the market and there is not such an active search for new markets. Possibly the business becomes ossified. In the end the only thing left is a take-over by one of the public companies. I shall relate my bitter experience in that direction in a few moments.
As a result of the proposals in this Bill and those which will no doubt appear in yet another Finance Bill, to be brought forward by the Government if they survive until the autumn, things are made worse instead of better. For a long time estate duty has been the death knell of the small business. Now the gifts tax makes it much worse. This tax will go on and there is no hope of getting over it by using the inter vivos rule which has been an escape route for some small businesses for a long time.
In their proposals in this Bill, and in the threats they make about the next one, the Government are making it more difficult for the father to hand over to his son, or for the proprietor to hand over to new management. The least the Government can do if they believe in small firms is to accept one of these clauses. If they are serious about wanting to provide employment they should look after the prosperity of the small businesses who employ the majority of employed people in the country.
In many cases the profits of small firms as expressed in terms of a percentage of turnover are much better than those of very big companies. I am glad that my hon. Friend the Member for Basingstoke told us what profits are. There is a great misconception about them. During the General Election we had a fearful hoo-hah about the obscene profits of some companies which were declaring their figures in February. I agree with the word "obscene". I come from the

world of small businesses. If I had turned in to my shareholders in a small company profit figures expressed as a percentage of turnover, the sort of thing ICI was doing, I would have been rather ashamed of myself. Those profits were nothing like enough to finance future investments.
As the managing director some years ago, of a small company in the engineering industry, employing about 120 people, I moved from a loss to a profit and then proceeded, over four years, to double the profit every year. The profits went up rather more than twice as much each year. As a result of that success all that I had at the end of the day was a vastly increased overdraft. Profits are not cash in the bank. Corporation tax is an addition, but the overdraft is a severe strain on liquidity for a small company trying to survive and increase its prosperity and increase the number of jobs it is able to offer in the market.
I hope we can get it across that profits are not cash at the bank which can be milked by the Treasury. Profits are often an important factor in the survival of a business, either because they are passed on to the people who are running the business, to enable them to make up the cash so that the transfer can take place, or merely used to finance the business. The only source of finance for the small company lies in its own profits.
I hope my hon. Friend the Member for Basingstoke is right in his confidence that the Chief Secretary will accept at least one of these clauses.

Mr. Peter Rost: Supporting my hon. Friend the Member for Basingstoke (Mr. Mitchell) and the hon. Member for Bolton, West (Mr. Redmond), I express a hope that the Chief Secretary will seriously take on board the points being made by hon. Members on this side. It is unfortunate that the Chief Secretary has no guidance from his own back benchers because quite clearly they are not interested in small businesses any more than they are interested in the prosperity of the economy as a whole.
I hope the Chief Secretary will accept new Clause 14. He has a particularly onerous responsibility on the Treasury Bench of being virtually the only voice


left on that bench attempting to salvage what is left of confidence in the British industry.
Having made some very acceptable and generous concessions at the Committee stage of the Finance Bill, which will assist the prosperity of the country, he will now surely accept that the responsibility on his shoulders to see reason is very heavy. Although he understands these matters, it is clear that many of his colleagues not only do not understand what makes this country tick, and what our prosperity depends upon, but are doing their very best to sabotage what is left of confidence in this country. Therefore, I hope the Chief Secretary will accept this responsibility because he understands these matters. He knows the importance of small businesses in this country. He must also know, when small companies are in their vital growth stage, and are very delicate flowers which need fertiliser and not weed-killer of the type proposed by Members opposite, of the vast advantages that can accrue to the economy as a whole from allowing that moderate and reasonable tax concession.
My hon. Friend the Member for Bolton, West has already quoted an example of the way in which profits rise as a small business is successful. The profits of smaller companies rise at a much faster rate through growth than those of the large groups and companies. As a result, eventually, within perhaps a few years, the corporation tax and other taxes paid by that company rise astronomically from nothing to quite useful amounts. Therefore, the argument should be that by making some concessions in the early stages of a small business, and allowing it to grow faster as a result and to flourish, the eventual benefit to the community, to the economy and to the taxpayer is not only more secure but also more substantial. Without that fertiliser or encouragement given by the Treasury in the early years the final "take" would be very much less, assuming the company survived.
Second, small companies are being squeezed by several factors not yet mentioned in this debate. Those companies are being squeezed because they are small, because they are dependent upon larger suppliers for their raw materials and their services, who can put on the squeeze by delaying payment to the small

companies. Small companies are also squeezed by their large customers. The problems of a small company in financing its workload are very much more substantial than those of a larger company with stronger bargaining power.
I hope the Chief Secretary does take on board the effect of this on a small company which is squeezed between a large supplier and a large customer, where the supplier presses for payment but where the customer delays paying for the services or product received.
There is a further reason why smaller companies are being squeezed in a way which does not apply so much to the larger groups. The directors running small companies already have their personal cash heavily involved in these companies. The directors are already fully involved in their businesses. The future of such directors and of their families is tied up in their companies and their prosperity. In many cases the directors even have to give bank guarantees personally to help provide extra loans for small businesses. In other cases the directors have to "throw in" their house mortgages in order to secure extra bank loans. Those are additional burdens and risks which small businesses have to take in order to raise the working capital they need. That is a valid additional reason why this very moderate tax concession should be granted to those small businesses on whom the prosperity of this country so much depends.

Mr. Cecil Parkinson: I support the new clauses and the amendments which my hon. Friend the Member for Basingstoke (Mr. Mitchell) introduced so well this afternoon. I supported my right hon. Friend the then Chancellor in introducing the imputation system and opting for it, but I also agreed at that time with the very good speeches made by the Chief Secretary to the Treasury pointing out that this would have the effect of substantially increasing the tax liability of a number of close companies. My right hon. Friend recognised the problem and introduced the idea of small business relief, recognising that there is a band of companies which relies very much on retained profits to finance expansion. He recognised that those companies perform a service and deserve special help.
It was pointless to force out of those companies and into the hands of shareholders dividends which would then be surtaxed. The shareholder would be left to pile back into the business what was left of the surtaxed income. For that reason my hon. Friend introduced the idea of small business relief at the levels of £15,000 and £25,000.
The Chief Secretary to the Treasury, with his immense practical experience, recognised the problems of the small business and argued at that time that close companies would be damaged by the imputation system, and, by implication, lent his support to the idea of small business relief. Unlike many of us, he is now in the happy situation of being in a position to make the rules and not just to have to interpret and live with them. I urge him to take his pick from the large range of options which my hon. Friend has placed at his disposal.
I do not go the whole way with my hon. Friend in saying that we should allow this relief to companies up to the stage where they go public that would be going too far. Once the company reaches a certain size and attains a certain profitability, it does not have to look to the market for its money. In fact very few companies do that, very wisely so. I think it is wrong to go to the market too soon.
I hope that the Minister will now accept this opportunity, which my hon. Friend has temptingly provided, for an increase in the level at which small business relief becomes available. In so doing he will be achieving two things. He will be putting his money where his mouth is and, in addition, he will be gaining the support of a group of people who do not always look on his party with favour but who provide this country with a source of growth and employment which is valuable to it. I hope that at the end of the debate the hon. Gentleman will not miss this golden and exciting chance.

7.0 p.m.

Mr. Maurice Macmillan: In supporting the new clause, I must declare a partial interest. In so far as my family business does not, I think, come within the range of any of the new clauses that we are discussing, I have no personal interest, but in so far as it is

an unquoted company, I do. I think, therefore, that the only point I would add to the argument is to urge the Chief Secretary to remember that the whole of our industrial society depends, not upon wages or prices or profits, but upon the capacity of British industry to create new wealth and to go on creating it.
We have not got the sources of overseas wealth which we once had and which, in effect, provided the nation with a very large unearned income. We now have to rely wholly on what we produce and manufacture in goods and services and sell overseas, and on what we can invest and create for that purpose at home. I urge the hon. Gentleman to think of these new clauses in such terms and to pick the one which gives the highest relief possible.
This is perhaps particularly important at present, for it is virtually impossible for any company to get a new quotation. I believe that there has only been one new quotation this year, and that was an internal affair. So a larger number of companies than usual depend on their retained profits not only to expand but actually to exist.
In an inflationary situation, the turnover can increase, in money terms, without any new real wealth being produced at all. Yet that increase in turnover, albeit in itself expressed only in money terms, requires extra capital to finance it, and in the companies we are talking about that extra capital can only come from retained profits. It just is not possible for them to use the banks to finance expansion and an increasing real turnover.
If, for example, a firm has an unexpected success in exporting, it is liable to find itself having to finance a longer credit with greater stocks and more work in progress, and therefore its very success may lead it to risk financial problems or, alternatively, to refuse valuable export orders. That is not the way to create new wealth. It is not a way to get innovation. I hope that the hon. Gentleman will remember the size and scope of these companies, and the effect they have collectively, on employment and the economy as a whole.
About 9,000 companies have shares which are quoted on the Stock Exchange. Leaving aside institutions like finance


companies, and so on, there are about 300,000 active unquoted companies. There are about 50,000 unquoted companies with a turnover of £500,000 a year or more; so this is a not inconsiderable proportion of our manufacturing and service industries. Again, leaving aside those employed by the State—in the broadest sense—of the employees in the private sector, 51 per cent. are employed by unquoted companies—including small businesses—and 49 per cent. by quoted companies. It is the capacity of small businesses to grow which must greatly affect employment prospects for the future.
Finally, records since the war show that most of the technical innovations of British industry started—I do not say that they necessarily continued—in small companies in the unquoted sector—very often for the very good reason that the innovation required a risk to be taken by those who made it—a risk which they could not properly have taken as directors of a public company with other people's money but which they were willing to take with their own, backing their own knowledge, expertise and work, having faith in themselves and believing that they could build up their innovation as part of our industrial heritage for the future. It is that spirit which over the years has built up our industry and it is that process that we seek to foster for the future.

Mr. Andrew Bowden: I must declare an interest. I am and have been associated with companies which have had profit figures in the ranges mentioned in some of the new clauses. I do not intend to bore the House by repeating the effective arguments which have been made by my right hon. and hon. Friends; I merely make an appeal to the Chief Secretary to the Treasury. I think the House knows that he understands the problems rather better than many of the right hon. and hon. Friends, and I remind him now of the many effective speeches he has made in the past on this subject and ask him to search his heart, not his conscience, very carefully and see whether he can find a way of accommodating the House and the small businesses.
It is natural that any Government should look for areas for increased taxation, but let these companies produce

their small golden eggs with a minimum amount of tax, because those golden eggs will turn into bigger golden eggs and then, when they reach that size, the Government will find it much easier to take a substantial share. But if the Government kill the chicken too soon, even the small golden eggs will disappear. If the Government want money, let them give the small companies a chance to produce it.

Sir Harmar Nicholls: Of necessity, when one is supporting the point of view set out in these new clauses a certain amount of reiteration has to go on. I do not suppose that, after the speeches we have heard already in the debate, there are many new points left. But what can and ought to be done, particularly to an accountant Minister, is to produce a little practical evidence to support some of the points made.
I was particularly impressed by the reminder of my right hon. Friend the Member for Farnham (Mr. Macmillan) that large and important companies have developed from small owner-managed companies of only a few years ago. I come from the Midlands—the part of England that really matters. For example, there is the great Guest Keen and Nettle-fold organisation, which so impresses the world today. Its ingredients were Cottrell's factory, in Station Street, Darlaston, and Garringtons, of The Green, Darlaston. We have seen all these small factories eventually merge into something of world-wide significance. I agree that if, in those early days, they had had to withstand all the bureaucracy, taxation and interference that we have today, they could not have grown to this kind of importance.
Many new industries are developing, upon which the Great Britain of the future will depend. One knows from one's contacts that the bureaucracy and the stranglehold of the regulations and taxation that they have to face will make it almost impossible for these people to make the contribution for which they have the potential.
I also support the new clauses from the philosophical point of view. One of our problems is that industry is pretty well controlled by what is called the managerial-technological society. We have managers with great power at the head of great organisations, who are important


as long as they are there but who become of no significance once they retire. Their stake in the future—their desire to leave behind a viable firm—is not as great as that of the old owner-employers, who were concerned with passing on their assets. One of the inducements to people to work hard and develop things is the desire to leave something to their children.
Unless we keep an important segment of owner-employers who are prepared to work harder than many managerial dictators, the general structure and balance of our industrial society will not be so good. The Chief Secretary laughs; we have lots of laughs outside, but I am now making a serious point. The hon. Gentleman's Government are opposed to the profit system, but the minute the profit incentive is removed from this country we shall remove our chance of remaining a worth-while industrial power.
One cannot make a profit by producing something that people do not want; instead, one goes bankrupt. Nor can one make a profit by producing what people want, but at too high a price; that, too, leads to bankruptcy. One makes a profit only by producing something that people want at a price they can pay. It is from that profit that good wages come and reasonable taxation can be paid to maintain our general social structure and look after the disabled and the weak.
If one accepts that philosophy, which has stood the test of a century and more, one must acknowledge the strength of the new clauses. I hope that the Chief Secretary will not simply smile—although he smiles delightfully—and pass them off as an ideological and dogmatic approach by the Conservative Party. He should recognise them as an important part of our industrial structure and look at them with sympathy. Then, one of the new clauses may be accepted.

Mr. Nicholas Winterton: I support the new clauses. I must declare that I am associated with one small company. The clauses have been debated fully, and I endorse the comments of my right hon. Friend the Member for Farnham (Mr. Macmillan) and my hon. Friend the Member for Basingstoke (Mr. Mitchell).
My party can take some of the blame for the situation facing small business

today. Successive Governments have failed to appreciate the value of small commercial undertakings, which have been penally taxed. I hope that the Chief Secretary, for whom I have considerable respect and who knows a great deal about small business, will be sympathetic. It is easy for a member of the Government to answer comments one by one, without any intention of seriously considering any concessions. I hope that he will, instead, deal with the points raised sympathetically and fully and not just make the party points that perhaps, traditionally, he is expected to make.
7.15 p.m.
Small business can make an increasing contribution, and these clauses will help. Many of the Chief Secretary's hon. Friends have talked about the amount of taxpayers' money which is given to industry. As many of my right hon. Friends have said, the amount given to industry is only £1 for every £5 that they contribute to this country and the Exchequer. Small industry takes very little money from the Exchequer but provides a considerable amount in taxation.
Small businesses are in need of help. They were when my party was in Government, and unfortunately they received an unsympathetic hearing. The present Government have an opportunity to put some of this right and I hope that their party dogma will not overrule their under standing of the realities of the situation. These are reasonable clauses. For every £ 1 that the Minister gives, he will be rewarded tenfold if he sees his way clear to helping small business.

Mr. Joel Barnett: I am overwhelmed by the flattering way in which I have been described. Since hon. Members feel that I understand these matters so well, I hope that they will be able to accept my arguments.
I have long declared an interest in close companies, both before I became a Minister and since. The only way in which I have ever allowed that to influence me is that what I have learned has led me to realise the problems of different types of corporation tax and of measures which may hurt them. I do not retract one word that I have uttered in debates that we have had over many years.
There are eight new clauses before us and I am asked to perm one from them. The first seeks to lift the profits ceiling from £15,000 to £25,000 for entitlement to the 42 per cent. small companies rate of corporation tax under Section 95 of the Finance Act 1972. It would also increase the profits limit for marginal relief from £25,000 to £40,000.
The new clause would cost £15 million and the others would cost varying amounts. But I do not rest my case on the cost alone. The new clauses are also technically inadequate, because there is something wrong with the tapering basis, but as I am not resting my case on technical inadequacies, I will not weary the House with the details. I am sure that by the time I have finished I shall have convinced the House that it should not agree to these clauses.

Mr. David Mitchell: There is a suggested alteration in the tapering basis to make it rather longer than under the original provisions, simply in order to ensure that there is less discouragement to a company, once it is into the transitional period, from increasing its profits within that period. If it is too short, the company will be paying tax on its additional profits at a higher rate than 52 per cent.

Mr. Barnett: The hon. Gentleman understands the point exactly. But because of the way that he has the marginal relief in the new clauses, the proposed limits would mean a marginal rate of tax of 68·67 per cent. on profits between £25,000 and £40,000, whereas the present marginal relief is 67 per cent. Therefore, he wants to increase it. I mentioned that only because it may be of interest to the House. It is a piece of information that is very important to some people. It is as well that it be known.
At it stands at present, the effect of the Section 95 relief, if the amendment to Section 95 were carried, would be to leave only a small minority of companies—perhaps 4 per cent. or so—paying the full rate of corporation tax. I always like to give the House as much information as possible. I thought that these titbits of information might be useful to hon. Members. They should know that if these new clauses are passed they will be taking some 96 per cent. of companies outside

of the highest rate of corporation tax under the imputation system.
I do not dispute a number of the arguments which have been made about the difficulties of running the small company. I am only too well aware of them. But when I heard the hon. Member for Derbyshire, South-East (Mr. Rost) telling me that I needed to fertilise delicate flowers, I wondered where I was. When I heard the hon. Member for Brighton, Kemptown (Mr. Bowden) telling me that we were talking about golden eggs, I wondered whether they were the same sort of close companies that I used to deal with. But let us be quite clear. Many hon. Members have said that they want to help close companies which are unable to be quoted and floated on the Stock Exchange, which made it, therefore, less easy for them to obtain funds, and that we should enable them to plough back more of their profits and pay less in tax. But these new clauses would not apply merely to what is known as close companies. They would apply equally to quoted companies and to non-quoted companies, and to investment companies as well as to trading companies.
The hon. Member for Basingstoke (Mr. Mitchell) is always very fair. We have debated this matter at great length on many occasions. Indeed, this is the third time that we have debated the matter on this Bill. The hon. Gentleman quoted me as saying in Committee on the Finance Bill in 1972:
It is a fact that small companies of this kind that plough back their profits for growth and rarely, if ever, make a distribution will find their tax liability increased by 25 per cent.
That is absolutely true. But the hon. Gentleman should have gone on to read what I said after that. Perhaps it will help the House if I repeat what I said then:
Having said that, I am not myself prepared to assist those companies with an amendment which at the same time assists what I consider to be the wrong type of company."—[OFFICIAL REPORT, Standing Committee E, 26th June 1972; c. 1492.]
I was referring to the type of companies that I do not particularly want to help, that is, those companies which do not plough back their profits, and those companies such as small investment companies, which these clauses would help. This was the advantage of the old, classical type of corporation tax.

Mr. David Mitchell: I would not wish the hon. Gentleman to think that I had, either intentionally or unintentionally, quoted only part of his remarks on that occasion and that by failing to complete the sentences I had left the House with an erroneous impression. If the hon. Gentleman will look at column 1492, he will find that the words that I quoted were at the end of his speech and that he was then followed immediately by my right hon. Friend the Member for Wan-stead and Woodford (Mr. Jenkin). Therefore, while the hon. Gentleman is quoting no doubt from his speech on that day or some other day near it, it is not the quotation that I used. Therefore, I would not want him to think that I had failed to give full weight to his words on that occasion.

Mr. Barnett: I do not want to make too much of this matter. I do not wish to accuse the hon. Gentleman of being unfair. However, I have with me a copy of the OFFICIAL REPORT Of Standing Committee E, and I was reading from column 1492.
As I have said, the case that I have constantly made in the House and in Committee has been that the type of corporation tax that I personally prefer is not the imputation system. Indeed, judging from the great strength of feeling and the arguments put forward by the hon. Member for Peterborough (Sir Harmar Nicholls), the hon. Member for Macclesfield (Mr. Winterton) and many others, saying how strongly they feel about close companies—I am delighted that that is so—I am a little surprised that they did not express those views about the imputation system when it was being introduced.

Mr. Winterton: I did.

Mr. Barnett: I absolve the hon. Gentleman. The fact is, however, that it is the imputation system that makes life very difficult for small companies. I do not dispute that, nor does the hon. Member for Basingstoke. The trouble is that hon. Members are trying to have it both ways. I do not blame them for that. It is an understandable desire. But it is very difficult in the corporation tax system because one cannot have both the imputation system and the classical system at the same time. That is the best way

to help close companies, but one cannot do it.
However, that is not the purpose of these new clauses. The reason that it is not the purpose is that I assume that certainly hon. Members on the Opposition Front Bench and the former Chief Secretary, the right hon. Member for Farnham, will know very well that it is not possible to have an imputation system for 4 per cent. of companies and a classical system for 96 per cent. That is the reason and the real cause of the trouble. So I fear that hon. Members are complaining about the wrong things.
In an excellent speech about close companies the hon. Member for Basingstoke said that we ought to have a corporation tax system for small companies which encourages plough-back. I agree with him, but that is not what the House has now got. The previous Government chose a different form of corporation tax. Hon. Members are now trying to change it for close companies—not in the new clauses, but from their speeches it would seem that that is what they want to do, otherwise we should not have heard the enormously powerful speeches from the hon. Member for Peterborough and others who feel so strongly about close companies.
Incidentally I would not want to accuse the hon. Member for Peterborough of not having read the eight new clauses. If he read them diligently, as I am sure he always reads such things, he would have realised that what he is seeking to do is not precisely what hon. Members have in mind. They will certainly give some assistance to companies with small profits, but that is not the same thing as assisting small companies. Hon. Members wish, therefore, to give assistance under these clauses to quoted companies and to investment companies—the companies which were not referred to by them. They were talking about trading companies and the need to help the great trading companies of this nation which they desperately want to make larger profits. Why did we not hear this sort of speech from the hon. Member for Peter borough—

Sir Harmar Nicholls: rose—

Mr. Barnett: I love to hear the hon. Gentleman, but not now. All right I will give way to him.

Sir Harmar Nicholls: I am glad that the time has not yet come when the hon. Gentleman decides when I shall speak or remain silent.
I never agreed with the imputation system. All that I want to get into the Committee is the recognition that small companies need help. If it is that they are to be told to fertilise their companies front their own profits and if the hon. Gentleman has that in his head, let him put that point of view in some form. I do not care whether it be in these new clauses or in amendments from him, provided that the net result will help small companies which need help. If in the process of helping the many we help one or two investment companies, which the hon. Gentleman hates, or finance companies, which he dislikes, I do not mind that. If it is to the general good to strengthen the base of small companies, it is the right price to pay.

7.30 p.m.

Mr. Barnett: If the hon. Gentleman is now telling me that he is not too happy about the eight clauses but would like something else I would be happy to look into that on another occasion, but at the moment we are discussing the eight clauses. I am taking a tally of all Members of the Opposition who do not like the imputation system, and I will note it.
What the clauses are seeking to do is not what hon. Members have in mind. The proposals would not help family businesses—

Mr. Redmond: As the Chief Secretary is taking note of who does and who does not like the imputation system, may I go on record for the imputation system for the publicly owned enterprise but not for the small company? However, this does not alter what we are arguing about on the clauses.

Mr. Barnett: The hon. Gentleman shows how impossible it is to have an imputation system for 4 per cent. of companies and the classical system for the remaining 96 per cent.—

Mr. Maurice Macmillan: The Chief Secretary has failed completely to deal with the imporant part of the argument. Much as I agree with the imputation system and relief for small companies—which we gave—the difficulty for small

companies is greatly increased by the fact that the borrowing rate is now 15 per cent. That and the present inflation rate makes it extremely difficulty to finance expanding turnover. The Chief Secretary has ignored that part of the argument.

Mr. Barnett: That was an ingenious intervention, but it did not deal with the point I was making that it is impossible to have the imputation system for 4 per cent. of the companies and the classical system for the other 96 per cent. The right hon. Gentleman is on a wholly different point. He is on a point on which he is now prepared to move a little further than he and his right hon. Friends did under Section 95 and increase the amount for small companies.
I resist what is being proposed because of what it would give to a large number of companies. I do not hate these companies. It would be absurd to suggest that I do. We are talking about what type of companies should pay a higher rate and what type should pay a lower rate. It was the right hon. Gentleman who introduced the system, not we. I am surprised that he does not like it—[Interruption.] It seems he does like it. I am glad that he likes the system we have. We are left with the situation in which companies with small profits will suffer, close companies amongst them. Hon. Members opposite have said how much they appreciate the knowledge which I bring to these matters and I naturally expect them to withdraw the eight clauses and to allow us to move on.

Mr. David Howell: The whole House will be deeply disappointed by that uncharacteristically lightweight contribution from the Chief Secretary. I was wondering, although a little despondently, which argument he would dodge behind this time. In Committee we discussed small companies, although in a different context, which related to payments in addition to advance corporation tax. The Chief Secretary then tried to turn the argument by saying that small companies which were expanding would not be able to pay dividends and would be hurt by payments in addition to ACT. I looked forward to hearing the Chief Secretary's excuse this time. He has dodged behind another tree. This time his feeble argument is that he cannot do anything about the situation because he does not like the imputation system.
That is the sole basis on which he is rejecting the arguments we put forward, not just as a criticism of the present tax system, but, as my right hon. Friend the Member for Farnham (Mr. Macmillan) emphasised, in a new situation. There is a problem here which we must get over to hon. Gentlemen on the Government side. In Committee the Government opposed the idea that there is a new tax situation in which they must act urgently to save us from greater disasters. We have had no success in establishing this in the minds of those on the Treasury Bench.
My hon. Friends have raised their arguments with great restraint. I was pleased to hear them give explanations to hon. Gentlemen on the Government side who clearly do not understand the nature and role of profits. It is important to understand that profits are the engine of advance. If there are no profits there are no jobs. I know that it is difficult for hon. Members on the Government side to grasp this because they have been taught different ways over the years, but I am dealing here with hard economic facts, which must be faced, particularly in relation to the sector of small unquoted companies.
The Chief Secretary has been a little sensitive about his past contributions in debates on this subject. In days gone by some of his hon. Friends, such as the hon. Member for Ashton-under-Lyne (Mr. Sheldon), as well as the Chief Secretary himself, played an important rôle in bringing to the House some sanity, intelligence and understanding in Opposition. Now things have changed substan-

tially, and all we have is a feeble argument which does not begin to meet the points put from this side.

New Clause 14 is a modest proposal, perhaps too modest. We have learnt from a parliamentary answer that the cost which it would involve would be about £15 million. I would have thought this a cheap way for the Government to do something they desperately need to do, and which they are even beginning to admit they need to do, that is, to try to restore business confidence, particularly among smaller companies. We can all think of better ways of restoring business confidence. For instance, we could silence the Secretary of State for Industry, who must cost the country at least £15 million a day, not a year. That would be a much better way to deal with business confidence.

It seems incredible to me, and, I am sure, to my lion. Friends, that while many companies—I do not know how many extra companies would be involved in this, certainly tens of thousands—are trapped by higher corporation tax, by the consequences of the investment income surcharge, high interest rates and a rapidly deteriorating situation, the Chief Secretary can sit there and say that action cannot be taken because he does not like the imputation system. That is a feeble reaction in the face of a difficult situation which my right hon. and hon. Friends have described. I advise my right hon. and hon. Friends to press this matter in the Lobby.

Question put:—

The House divided: Ayes 292, Noes 267.

Divison No. 83.]
AYES
17.40 p.m.


Adley, Robert
Bowden, Andrew (Brighton, Kemptown)
Clarke, Kenneth (Rushcliffe)


Aitken, Jonathan
Boyson, Dr. Rhodes (Brent, N.)
Clegg, Walter


Alison, Michael (Barkston Ash)
Braine, Sir Bernard
Cockcroft, John


Allason, James (Hemel Hempstead)
Bray, Ronald
Cooke, Robert (Bristol, W.)


Amery, Rt. Hn. Julian
Brittan, Leon
Cope, John


Ancram, M.
Brocklebank-Fowler, Christopher
Cordle, John


Archer, Jeffrey
Brown, Sir Edward (Bath)
Cormack, Patrick


Atkins, Rt. Hn. Humphrey (Spelthorne)
Bruce-Gardyne, J.
Corrie, John


Awdry, Daniel
Bryan, Sir Paul
Costain, A. P.


Banks, Robert
Buchanan-Smith, Alick
Craig, Rt. Hn. William (Belfast, W.)


Beith, A. J.
Buck, Antony
Critchley, Julian


Bell, Ronald
Budgen, Nick
Crouch, David


Bennett, Sir Frederic (Torbay)
Bulmer, Esmond
Crowder, F. P.


Bennett, Dr. Reginald (Fareham)
Burden, F. A.
Davies, Rt. Hn. John (Knutsford)


Benyon, W.
Butler, Adam (Bosworth)
d'Avigdor-Goldsmid, Maj.-Gen. James


Berry, Hon. Anthony
Carr, Rt. Hn. Robert
Dean, Paul (Somerset, N.)


Biffen, John
Chalker, Mrs. Lynda
Dixon, Piers


Biggs-Davison, John
Channon, Paul
Dodds-Parker, Sir Douglas


Blaker, Peter
Chataway, Rt. Hn. Christopher
Dodsworth, Geoffrey


Boardman, Tom (Leicester, S.)
Churchill, W. S.
Douglas-Home, Rt. Hn Sir Alec


Body, Richard
Clark, A. K. M. (Plymouth, Sutton)
Drayson, Bu[...]aby


Boscawen, Hon. Robert
Clark, William (Croydon, S.)
du Cann, Rt. Hn. Edward




Durant, Tony
Joseph, Rt. Hn. Sir Keith
Rawlinson, Rt. Hn. Sir Peter


Eden, Rt. Hn. Sir John
Kaberry, Sir Donald
Redmond, Robert


Edwards, Nicholas (Pembroke)
Kellett-Bowman, Mrs. Elaine
Rees, Peter (Dover &amp; Deal)


Elliott, Sir William
Kershaw, Anthony
Rees-Davies, W. R.


Emery, Peter
Kilfedder, James A.
Reid, George


Ewing, Mrs. Winifred (Moray &amp; Nairn)
Kimball, Marcus
Renton, Rt. Hn. Sir David (H't' gd 'ns' re)


Eyre, Reginald
King, Evelyn (Dorset, S.)
Renton, R. T. (Mid-Sussex)


Fairgrieve, Russell
King, Tom (Bridgwater)
Rhys Williams, Sir Brandon


Farr, John
Kitson, Sir Timothy
Ridley, Hn. Nicholas


Fell, Anthony
Knight, Mrs. Jill
Ridsdale, Julian


Fenner, Mrs. Peggy
Knox, David
Rifkind, Malcolm


Fidler, Michael
Lamont, Norman
Rippon, Rt. Hn. Geoffrey


Finsberg, Geoffrey
Lane, David
Roberts, Wyn (Conway)


Fisher, Sir Nigel
Langford-Holt, Sir John
Rodgers, Sir John (Sevenoaks)


Fletcher-Cooke, Charles
Latham, Michael (Melton)
Ross, Stephen (Isle of Wight)


Fookes, Miss Janet
Lawrence, Ivan
Rossi, Hugh (Hornsey)


Fowler, Norman (Sutton C'field)
Lawson, Nigel (Blaby)
Rost, Peter (Derbyshire, S.-E.)


Fox, Marcus
Lester, Jim (Beeston)
Royle, Sir Anthony


Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
Lewis, Kenneth (Rtland &amp; Simford)
Scott-Hopkins, James


Freud, Clement
Lloyd, Ian (Havant &amp; Waterloo)
Shaw, Giles (Pudsey)


Fry, Peter
Luce, Richard
Shaw, Michael (Scarborough)


Galbraith, Hn. T. G. D.
McAdden, Sir Stephen
Shelton, William (L'mb'th, Streath'm)


Gardiner, George (Reigate &amp; Banstead)
MacArthur, Ian
Shersby, Michael


Gardner, Edward (S. Fylde)
MacCormack, Iain
Silvester, Fred


Gibson-Watt, Rt. Hn. David
McCrindle, R. A.
Sims, Roger


Gilmour, Rt. Hn. Ian (Ch'sh' &amp; Amsh'm)
McCusker, H.
Skeet, T. H. H.


Gilmour, Sir John (Fife, E.)
Macfarlane, Neil
Smith, Cyril (Rochdale)


Glyn, Dr. Alan
MacGregor, John
Smith, Dudley (W'wick &amp; L'm'ngton)


Goodhew, Victor
McLaren, Martin
Spence, John


Goodlad, A.
Macmillan, Rt. Hn. M. (Farnham)
Spicer, Jim (Dorset, W.)


Gorst John
McNair-Wilson, Michael (Newbury)
Spicer, Michael (Worcestershire, S.)


Gow, Ian (Eastbourne)
McNair-Wilson, Patrick (New Forest)
Sproat, Iain


Gower, Sir Raymond (Barry)
Madel, David
Stainton, Keith


Grant, Anthony (Harrow, C.)
Marshall, Michael (Arundel)
Stanbrook, Ivor


Gray, Hamish
Marten, Neil
Stanley, John


Grieve, Percy
Maude, Angus
Steel, David


Griffiths, Eldon (Bury St. Edmunds)
Maudling, Rt. Hn. Reginald
Steen, Anthony (L'pool, Wavertree)


Grimond, Rt. Hn. J
Mawby, Ray
Stewart, Donald (Western Isles)


Grist, Ian
Maxwell-Hyslop, R. J.
Stewart, Ian (Hitchin)


Grylls, Michael
Mayhew, Christopher (G'wh, W'wch, E)
Stodart, Rt. Hn. A. (Edinburgh, W.)


Gurden, Harold
Mayhew, Patrick (Royal T'bridge Wells)
Stokes, John


Hall, Sir John
Meyer, Sir Anthony
Stradling Thomas, John


Hall-Davis, A. G. F.
Miller, Hal (B'grove &amp; R'ditch)
Taylor, Edward M. (Glgow, C'cart)


Hamilton, Michael (Salisbury)
Mills, Peter
Taylor, Robert (Croydon, N.W.)


Hampson, Dr. Keith
Miscampbell, Norman
Tebbit, Norman


Hannam, John
Mitchell, David (Basingstoke)
Temple-Morris, Peter


Harrison, Col. Sir Harwood (Eye)
Moate, Roger
Thatcher, Rt. Hn. Margaret


Harvie Anderson, Rt. Hn. Miss
Molyneaux, James
Thomas, D. E. (Merioneth)


Hastings, Stephen
Money, Ernle
Thorpe, Rt, Hn. Jeremy


Havers, Sir Michael
Monro, Hector
Townsend, C. D.


Hawkins, Paul
Moore, J. E. M. (Croydon, C.)
Trotter, Neville


Hayhoe, Barney
Morgan-Giles, Rear-Adm.
Tugendhat, Christopher


Heath, Rt. Hn. Edward
Morris, Michael (Northampton, S.)
Tyler, Paul


Henderson, Douglas (Ab 'rd' nsh 're, E)
Morrison, Charles (Devizes)
van Straubenzee, W. R.


Henderson, J.S.B.(Dunbartonshire, E.)
Morrison Peter (City of Chester)
Vaughan, Dr. Gerard


Heseltine, Michael
Mudd, David
Viggers, Peter


Higgins, Terence
Neave, Airey
Waddington, David


Hill, James A.
Neubert, Michael
Wainwright, Richard (Colne Valley)


Holland, Philip
Newton, Tony (Braintree)
Wakeham, John


Hooson, Emlyn
Nicholls, Sir HarmarWalder, David (Clitheroe)


Hordern, Peter
Normanton, Tom
Walker-Smith, Rt. Hn. Sir Derek


Howe, Rt. Hn. Sir Geoffrey (Surrey, E.)
Nott, John
Wall, Patrick


Howell, David (Guildford)
Onslow, Cranley
Warren, Kenneth


Howell, Ralph (Norfolk, North)
Oppenheim, Mrs. Sally
Wells, John


Howells. Geraint (Cardigan)
Orr, Capt. L. P. S.
Wiggin, Jerry


Hunt, John
Osborn, John
Wigley, Dafydd (Caernarvon)


Hurd, Douglas
Page, Rt. Hn. Graham (Crosby)
Wilson, Gordon (Dundee, E.)


Hutchison, Michael Clark
Page, John (Harrow, W.)
Winstanley, Dr. Michael


Iremonger, T. L.
Pardoe, John
Winterton, Nicholas


Irvine, Bryant Godman (Rye)
Parkinson, Cecil (Hertfordshire, S.)
Wood, Rt. Hn. Richard


James, David
Pattie, Geoffrey
Worsley, Sir Marcus


Jenkin, Rt. Hn. P. (R'dge W'std &amp; W'fd)
Percival, Ian
Young, Sir George (Ealing, Acton)


Jessel, Toby
Pink, R. Bonner



Johnson Smith, G. (E. Grinstead)
Price, David (Eastleigh)
TELLERS FOR THE AYES:

Johnston, Russell (Inverness)
Prior, Rt. Hn. James
Mr. Spencer Le Marchant and


Jones, Arthur (Daventry)
Raison, Timothy
Mr. Michael Roberts


Jopling, Michael
Rathbone, Tim





NOES


Abse, Leo
Atkins, Ronald
Baxter, William


Allaun, Frank
Atkinson, Norman
Bennett, Andrew F. (Stockport, N)


Archer, Peter
Bagier, Gordon A. T.
Bidwell, Sydney


Armstrong, Ernest
Barnett, Guy (Greenwich)
Bishop, E. S.


Ashley, Jack
Barnett, Joel (Heywood &amp; Royton)
Blenkinsop, Arthur


Ashton, Joe
Bates Alf
Boardman, H.




Booth, Albert
Golding, John
Moyle, Roland


Boothroyd, Miss Betty
Gourlay, Harry
Murray, Ronald King


Bottomley, Rt. Hn. Arthur
Graham, Ted
Newens, Stanley (Harlow)


Boyden, James (Bishop Auckland)
Grant, George (Morpeth)
Oakes, Gordon


Bradley, Tom
Grant, John (Islington, C.)
Ogden, Eric


Broughton, Sir Alfred
Griffiths, Eddie (Sheffield, Brightside)
O'Halloran, Michael


Brown, Bob (Newcastle upon Tyne, W.)
Hamilton, William (Fife, C.)
O'Malley, Brian


Brown, Hugh D. (Glasgow, Provan)
Hamling, William
Orbach, Maurice


Brown, Ronald (H'kney, S. &amp; Sh'ditch)
Hardy, Peter
Ovenden, John


Buchan, Norman
Harper, Joseph
Owen, Dr. David


Butler, Mrs. Joyce (H'gey, WoodGreen)
Harrison, Walter (Wakefield)
Padley, Walter


Callaghan, Jim (M'dd'ton &amp; Pr'wich)
Hatton, Frank
Palmer, Arthur


Campbell, Ian
Healey, Rt. Hn. Denis
Park, George (Coventry, N.E.)


Cant, R. B.
Heffer, Eric S.
Parker, John (Dagenham)


Carmichael, Neil
Hooley, Frank
Parry, Robert


Carter, Ray
Horam, John
Pendry, Tom


Carter-Jones, Lewis
Huckfield, Leslie
Phipps, Dr. Colin


Castle, Rt. Hn. Barbara
Hughes, Rt. Hn. Cledwyn (Anglesey)
Prescott, John


Clemitson, Ivor
Hughes, Mark (Durham)
Price, Christopher (Lewisham, W.)


Cocks, Michael
Hughes, Robert (Aberdeen, North)
Price, William (Rugby)


Cohen, Stanley
Hughes, Roy (Newport)
Radice, Giles


Coleman, Donald
Hunter, Adam
Richardson, Miss Jo


Colquhoun, Mrs. M. N.
Irvine, Rt. Hn. Sir A. (L'p'I, EdgeHI)
Roberts, Albert (Normanton)


Conlan, Bernard
Irving, Rt. Hn. Sydney (Dartford)
Roberts, Gwilym (Cannock)


Cook, Robert F. (Edinburgh, C.)
Jackson, Colin
Robertson, John (Paisley)


Cox, Thomas
Janner, Greville
Roderick, Caerwyn E.


Craigen, J. M. (G'gow, Maryhill)
Jay, Rt. Hn. Douglas
Rodgers, George (Chorley)


Cronin, John
Jeger, Mrs. Lena
Rodgers, William (Teesside, St'ckton)


Crosland, Rt. Hn. Anthony
Jenkins, Hugh (W'worth, Putney)
Rooker, J. W.


Cryer, G. R.
Jenkins, Rt. Hn. Roy (B'ham, St' fd)
Roper, John


Cunningham, G. (Isl 'ngt' n, S &amp; F'sb'ry)
John, Brynmor
Rose, Paul B.


Cunningham, Dr. John A. (Whiteh'v'n)
Johnson, James (K'ston upon Hull, W)
Ross, Rt. Hn. William (Kilmarnock)


Dalyell, Tam
Jones, Alec (Rhondda)
Rowlands, Edward


Davidson, Arthur
Jones, Barry (Flint, E.)
Sandelson, Neville


Davies, Bryan (Enfield, N.)
Jones, Dan (Burnley)
Sedgemere, Bryan


Davies, Denzil (Llanelli)
Jones, Gwynoro (Carmarthen)
Selby, Harry


Davies, Ifor (Gower)
Judd, Frank
Shaw, Arnold (Redbridge, Ilford, S.)


Davis, Clinton (Hackney, C.)
Kaufman, Gerald
Sheldon, Robert (Ashton-under-Lyne)


Deakins, Eric
Kelley, Richard
Shore, Rt. Hn. Peter (S'pney &amp; P'plar)


Dean, Joseph (Leeds, W.)
Kilroy-Silk, Robert
Short, Mrs. Renée (W'hamp'n, N.E.)


de Freitas, Rt. Hn. Sir Geoffrey
Kinnock, Neil
Silkin, Rt. Hn. John (L'sham, D'ford)


Delargy, Hugh
Lambie, David
Silkin, Rt. Hn. S. C. (S'hwark, Dulwich)


Dell, Rt. Hn. Edmund
Lamborn, Harry
Sillars, James


Dempsey, James
Lamond, James
Silverman, Julius


Doig, Peter
Latham, Arthur (City of W' minster P'ton)
Skinner, Dennis


Dormand, J. D.
Lawson, George (Motherwell &amp; Wishaw)
Small, William


Douglas-Mann, Bruce
Leadbitter, Ted
Smith, John (Lanarkshire, N.)


Dunn, James A.
Lee, John
Snape, Peter


Dunnett, Jack
Lewis, Arthur (Newham, N.)
Spearing, Nigel


Dunwoody, Mrs. Gwyneth
Lewis, Ron (Carlisle)
Spriggs, Leslie


Eadie, Alex
Loughlin, Charles
Stallard, A. W.


Edelman, Maurice
Loyden, Eddie
Stewart, Rt. Hn. M. (H'sth, Fulh'm)


Edge, Geoff
Lyons, Edward (Bradford, W.)
Stoddart, David (Swindon)


Edwards, Robert (W'hampton, S.E.)
Mahon, Dr. J. Dickson
Stonehouse, Rt. Hn. John


Ellis, John (Brigg &amp; Scunthorpe)
McCartney, Hugh
Stott, Roger


Ellis, Tom (Wrexham)
McElhone, Frank
Strang, Gavin


English, Michael
MacFarquhar, Roderick
Strauss, Rt. Hn. G. R.


Evans, Fred (Caerphilly)
McGuire, Michael
Summerskill, Hn. Dr. Shirley


Evans, Ioan (Aberdare)
Mackenzie, Gregor
Swain, Thomas


Evans, John (Newton)
McMillan, Tom (Glasgow, C.)
Thomas, Jeffrey (Abertillery)


Ewing, Harry (Stling, F'kirk &amp; G'm'th)
Madden, M. O. F.
Tierney, Sydney


Faulds, Andrew
Magee, Bryan
Tinn, James


Fernyhough, Rt. Hn. E.
Mahon, Simon
Tomlinson, John


Fitch, Alan (Wigan)
Mallalieu, J. P. W.
Tomney, Frank


Fitt, Gerard (Belfast, W.)
Marks, Kenneth
Torney, Tom


Flannery, Martin
Marquand, David
Tuck, Raphael


Fletcher, Raymond (Ilkeston)
Marshall, Dr. Edmund (Goole)
Urwin, T. W.


Fletcher, Ted (Darlington)
Mason, Rt. Hn. Roy
Varley, Rt. Hn. Eric G.


Foot, Rt. Hn. Michael
Meacher, Michael
Wainwright, Edwin (Dearne Valley)


Ford, Ben
Mellish, Rt. Hn. Robert
Walden, Brian (B'm'ham, Ladywood)


Forrester, John
Mendelson, John
Walker, Harold (Doncaster)


Fowler, Gerry (The Wrekin)
Mikardo, Ian
Walker, Terry (Kingswood)


Fraser, John (Lambeth, Norwood)
Millan, Bruce
Watkins, David


Freeson, Reginald
Miller, Dr. M. S. (E. Kilbride)
Weitzman, David


Galpern, Sir Myer
Mitchell, R. C. (S'hampton, Itchen)
Wellbeloved, James


Garrett, John (Norwich, S.)
Molloy, William
White, James


George, Bruce
Moonman, Eric
Whitehead, Phillip


Gilbert, Dr. John
Morris, Alfred (Wythenshawe)
Whitlock, William


Ginsburg, David
Morris, Charles R. (Openshaw)
Willey, Rt. Hn. Frederick



Morris, Rt. Hn. John (Aberavon)





Williams, Alan (Swansea, W.)
Wilson, William (Coventry, S.E.)
Young, David (Bolton, E.)


Williams, Alan Lee (Hvrng, Hchurch)
Wise, Mrs. Audrey
TELLERS FOR THE NOES:


Williams, Rt. Hn. Shirley (H'f'd &amp; St'ge)
Woodall, Alec
Mr. Walter Johnson and


Williams, W. T. (Warrington)
Woof, Robert
Mr. Laurie Pavitt.


Wilson, Alexander (Hamilton)
Wrigglesworth, Ian

Question accordingly agreed to.

Clause read a Second time, and added to the Bill.

New Clause 26

AMENDMENT OF SECTION 343 OF INCOME AND CORPORATION TAXES ACT 1970 TO ALLOW PENSION FUNDS TO INVEST IN BUILDING SOCIETIES AND RECLAIM INCOME TAX.

'Where any arrangements under section 343 of the Income and Corporation Taxes Act 1970 are in force in the case of any building society, as respects any year of assessment, income tax shall be deducted from, and repayment of income tax shall be made in respect of, dividends or interest payable in that year in respect of shares in or deposits with or loans to that building society by Pension Funds'.—[Mr. William Clark.]

Brought up, and read the First time.

Mr. William Clark: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Oscar Murton): With this new clause I suggest that we discuss new Clause 27 (Consequential amendments).

Mr. Clark: The House will no doubt remember that on 13th June in Committee on the Floor of the House we dealt with a similar clause. In view of that, I am the that it would be for the convenience of the House if we did not repeat all the speeches that we rehearsed on that occasion. I am delighted that the Chancellor of the Exchequer is present to listen to this debate.
One of the snags that faces building societies is that they borrow short and lend long. That is the essence of the building societies' cash flow problem. There is only one source of finance which is capable of lending long—namely, pension funds. By their very nature they lend long. There is a snag for the pension funds in that they are exempt from income tax. I hope that the Financial Secretary will agree and take on board—this is a point that we discussed in Committee—that pension funds are even excluded from development gains tax.
I remind the Financial Secretary that the income of pension funds is running

at approximately £1,600 million a year. Consequently, they have a tremendous amount of money to invest. I have tabled the new clause so as to try to convince the Treasury of the true position and to help the economy by allowing pension funds to be allowed, if so desired, to invest in building societies. The one snag is Section 343 of the Income and Corporation Taxes Act 1970. That is the section that controls tax regulations for building societies. I shall not go into the technicalities. The meaning of the section, in a nutshell, is that building societies borrow from the public and pay to the Exchequer what is known as a composite rate. That rate is based on the estimate of the Treasury of the investors who are liable at the standard rate and the investors who are liable at below the standard rate. By that means we get the composite rate, which at the moment is running at 23½ per cent.
I regret—this is a digression—that the result of the talks that have been going on between the Government and the Building Societies Association is that no relief will be given, on the composite rate, to buildings societies. With the increase in the standard rate rising from 30 per cent. to 33 per cent. it is obvious that the composite rate, in the normal course of events, would have followed that upward trend. I regret that the recent talks have been abortive.
Because building societies have the composite rate, the other regulation is that they cannot repay the tax that they deduct from the interest that they pay to their investors. For example, if I invest £100 in a building society and I receive 7½ per cent. tax free, I in fact receive £7·50 interest. It may be that my tax bracket is such that I do not pay tax at the standard rate, or I do not pay tax at the composite rate of 23½ per cent. Nevertheless, the building societies cannot repay any of that tax because of the tax regulations.
That is where the burden of the new clause lies, and I hope that the Financial Secretary will deal with this matter sympathetically. I do not quote from HANSARD, but the Minister said that he


would consider the matter with his advisers so as to determine whether he could come forward with something on Report which would allow pension funds to invest in building societies.
Why do pension funds not invest in building societies? The reason is that pension funds are exempted from tax. If they invest with the building societies the regulations do not allow them to reclaim tax. That means that nothing from the pension institutions is flowing into the building societies' coffers. I think it will be readily recognised on both sides of the House that building societies have a cash flow problem. No doubt they will have the same problem in future. I accept that the problem has been overcome temporarily by an injection of £500 million from the taxpayer. However, I do not think that that is the right way to deal with building societies. I think that they should have the right to borrow money from pension funds and that pension funds should have the right to have the tax that is deducted by the building societies repaid to them.
The Financial Secretary knows as well as everyone else that this proposal would not cost the Exchequer one farthing. It would allow pension funds, if they so wished, to invest in building societies. The Financial Secretary said in Committee that he would consider this matter sympathetically. He agreed with me that it would be of no cost to the Inland Revenue. For the life of me I cannot understand why building societies, who want to borrow long because they lend long, should not have this reservoir of long-term investment from pension funds made available to them. It is not available to them, because of the income tax regulations of building societies.
I hope that the Financial Secretary will accept new Clause 26 and also new Clause 27, which is consequential. By doing so he will confer great benefit on building societies and, in turn, on people who want to borrow from building societies.

8.0 p.m.

Mr. Michael Latham: I congratulate my hon. Friend the Member for Croydon, South (Mr. Clark) on tabling the new clause, which is similar to the one he moved in Committe of the whole House. I congratulate him further on getting it

selected for a second time. This has given the Financial Secretary an opportunity to tell the House his thoughts on the matter.
When we discussed the clause before, I said that although I was sympathetic to the idea in principle—as I still am—it was essential to ensure that any money from pension funds which came into building societies should be long-term money. We cannot have huge sums of hot money flowing in and out.
The record of the building societies over the last 20 years in increasing their assets has been truly remarkable. For example, between 1950 and 1972 the value of their total shares and deposits rose from £1,160 million to £14,269 million, making them one of the largest financial institutions in the country, with one building society bigger than the whole unit trust movement.
We must also remember the amount of pension fund money which would be potentially available if the clause were accepted. Over the last few years the value of life insurance and pension funds has expanded even more rapidly than that of building societies, rising from about £9 billion in 1960 to about £25 billion in 1971. We are talking about potentially enormous sums of money being attracted into the building society movement, but it must be essentially on a long-term basis.
Ironically, in spite of the difficulties with mortgages over the last few months, which have helped to motivate the new clause, the level of receipts from investors has never been particularly low. According to the table of receipts, in May 1973. building society receipts were £558.2 million. In May 1974, building society receipts were £502 million. The difference is that in May 1973 there was a far lower level of withdrawals. Whereas in May 1973 the net receipts of building societies—the money potentially available for mortgages—was £210.9 million. in May 1974 they were only £93 million. although the amount of money received was not dissimilar.
The problem is not the amount of money which has come into the building societies—that has remained much the same; the problem is that the level of withdrawals is high. That is why I have expressed concern about the possibility of hot money from pension funds going in and out quickly.
The right hon. Gentleman the Secretary of State for the Environment, in a letter of 25th June to the Director General of the Brick Development Association which was published in a Press notice, said:
I believe that the threat of a mortgage famine has been ended. The short-term loans to building societies coupled with a marked improvement in building society receipts following the Budget have already been reflected in a sharp increase in the level of new mortgage commitments entered into by building societies.
The remarks made by the Secretary of State were not received with a great deal of enthusiasm by the brickmakers, who responded by threatening to shut down several brick factories.
I am concerned about the nature of the repayment of the building society loan which the Financial Secretary mentioned in replying to the earlier debate. The terms of the loan which the Government entered into with the building societies involved the building societies in having to pay back, from September this year, 50 per cent. of the amount by which their net receipts exceeded £50 million in any one month. If that scheme had been operated in May—the latest figures I have to hand—there would have been a repayment of £93–50/2 million, which equals £21½ million. That is a significant proportion of the net receipts available to the building societies in that month, and there would, therefore, have been less money available to be pumped out in home ownership mortgages.
If the Government continue to require repayment of the loan, as they must—it would be better to set a higher figure than £50 million, which is the present basis. The figure should be raised to net receipts over £125 million, although I understand that that would entail the loan being rolled forward for a longer period. That revised figure is essential, if only to give a greater degree of confidence to prospective house buyers and to builders to get ahead with the work which the whole House wishes to be done.
The main problem with new housing starts is not the availability of mortgage money. The House knows that I previously had interests in this regard, although I no longer have them. In my

discussions within the last two weeks with both large and small builders, many of them have told me that the availability of money for their new houses is all right. The problem conies in the secondhand chain, and also in the lack of confidence of people in buying houses. One big builder told me that he was embarrassed by not being able to use the whole of the mortgage quota available to him from his local building society. That shows that the availability of mortgage money is not as great a problem is as generally thought. What is needed is the confidence to go ahead and buy a house.
The situation in the private house building market is very bad, and little has happened to induce me to believe that it will improve. If I may be so arrogant as to quote what I said in my maiden speech, I said:
It is no secret why this situation has arisen. It is because of the high level of interest rates and the shortage of building society finance. That is a fact of life. I have yet to be persuaded that any Government can do much about it…I fear, therefore, that the Secretary of State for the Environment has as gloomy a task ahead of him in his high office as had my right hon. and learned Friend the Member for Hexham (Mr. Rippon). There is little that either can do on their own. What needs to be done requires the support of the Chancellor of the Exchequer, and in some cases it is altogether beyond the control of the Government altogether."—[OFFICIAL REPORT, 12th March 1974; Vol. 870, c. 167.]
Although the clause would certainly be a useful change, much more is needed and needed now. The Economic Development Committee for Building forecast is of 120,000 private housing starts this year, compared with the 215,000 achieved last year. I believe that that forecast will prove to be too optimistic and that the outturn will be even lower. There is a real need to reawaken long-term confidence in the house-buying public. This will require new measures by the Government, some of which will require changes in Part III of the Bill. Let us deal with that situation when the time comes.

Dr. Gilbert: I have listened with interest to the well-informed remarks of the hon. Member for Melton (Mr. Latham). I shall not deal with all the points he raised, but his remarks were addressed more to the state of the building industry than they were to the provisions in the new clauses.
The hon. Member for Croydon, South (Mr. Clark), as usual, moved his new clause in a reasonable and constructive manner. I told the Committee at an earlier stage that I had considerable reservations about the practical effect of the proposals and about the attitude of the Building Societies Association towards them. I could not see that they would be particularly enthusiastic to have a facility of this sort available for I could see it having no practical effect.
Having said that, I have honoured my commitment given in Committee and made inquiries into the subject. I discovered that the Building Societies Association is anxious to have a clause on the lines of the two new clauses. There fore I am prepared to be as reasonable as the hon. Gentleman in meeting his point. When one undertakes to meet a point in Committee one can always see what can be done about tying up technical defects later on Report. In this case I am in some difficulty because both clauses contain technical defects to which I shall refer briefly in a moment—defects which it has not been possible for us to smooth away by a Government new clause in time for today's proceedings.
The difficulty about new Clause 27 is that it fails to delete a provision in Section 343(3) of the principal Act that prohibits any repayment of tax on building society interest. This would frustrate the whole object of the new clauses, which is to permit repayments of tax in the special case of pensions fund investments.
Clause 26, which is a substantial new provision, contains rather more fundamental weaknesses. In the first place it provides for deduction of tax in respect of interest paid to pension funds but does not provide for that tax to be paid to the Revenue. Secondly, the repayment of tax to pension funds is mandatory and is not subject to the normal rules and provisos in the Income Tax Act. Thirdly the term "pension funds
is not defined. It is not limited to approved pension funds. I could give the hon. Gentleman an illustration of the sort of tax avoidance device to take advantage of the somewhat loose drafting contained in the new clauses. However, I shall not weary the House unless the hon. Gentleman wishes me to do so. I assure him that we have looked closely at this matter.
I accept the full intention of what the hon. Gentleman seeks to achieve in legislative terms. It is no criticism of the hon. Gentleman that his clauses are somewhat defective. It is difficult for a private Member, even if well advised, to produce a draft that will satisfy the necessary scrutiny of the parliamentary draftsmen. I hope the hon. Gentleman will accept my assurance that, even though I am still unpersuaded that the economic effects of his proposals will be substantial—and I should be surprised if they have any economic effects in the short or medium term—I am prepared to accept the purpose of the new clauses.
I would not wish it to be said that we have rejected an opportunity to help the building societies. Therefore, if the hon. Gentleman withdraws the new clauses, I give him a commitment that in the next Finance Bill we shall table some new clauses to give full effect to what he has in mind.

8.15 p.m.

Mr. R. Carr: I should like to say a few words about the new clauses. It seems unlikely that the Financial Secretary will have an opportunity to introduce another Finance Bill for many years to come. Therefore, I believe that the Opposition should express some view on this topic.
I should like to pay tribute to my hon. Friend the Member for Croydon, South (Mr. Clark) because it is an example of what a Member of Parliament can do. My hon. Friend has been pursuing this line of argument with persistence and skill for some time in the life of the Conservative Government as well as during the term of office of the present Government. I am glad that he has come to a point at which the Government of the day have agreed to accept his argument in principle. One can be doubtful, as the Financial Secretary was doubtful, whether pension funds will flow into the building societies to the extent we would like to see even with the new Clauses. What is certain is that they will not flow into the building societies with the law as it now stands. I believe that the principle of the clause proposed by my hon. Friend will enable a possibility to be turned into a reality. Therefore, it is right that we should support the principle of the clause.
I am disappointed that, because of technical defects, the Financial Secretary could not accept the clause as it stood. I am also disappointed that the Government have not found it possible to come forward with their own corrected version of these provisions in time for the Bill. Nevertheless, we must accept that there are technical defects and we must look to the next Finance Bill.
I note the undertaking given by the Financial Secretary. If, as I imagine and hope, the next Finance Bill falls to be introduced by a Conservative Chancellor. I see no reason why this provision should not be dealt with in that legislation, whoever introduces it.

Mr. Graham Page: It was unreasonable of the Financial Secretary to reject the clause on technical drafting grounds. Each point he made in respect of drafting was such that the Bill could have been amended quite easily in the time between the clause having been tabled and the present debate. The hon. Gentleman could have brought forward Government amendments to put the clause right.
He said that the principle of the clause was acceptable. There would be no loss to the Revenue if the clause were accepted. Indeed, there is every chance of further funds being introduced into building societies on a long-term basis of the clause were accepted. I cannot be as kind to the Financial Secretary as was my right hon. Friend the Member for Carshalton (Mr. Carr). I think that there has been unreasonable delay in bringing forward technical amendments to a clause which has been well known. It is not as though my hon. Friend the Member for Croydon, South (Mr. Clark) has just produced the clause at the last moment. He has campaigned for it for a long time. The clause has been on the Order Paper. I must protest at its rejection on technical grounds which could have been put right by Government amendment.

Dr. Gilbert: I take the point made by the right hon. Member for Crosby (Mr. Page). We have tried in good faith to meet the proposal made by the hon. Member for Croydon, South (Mr. Clark) and at our instigation discussions were

held only this week with representatives of the Building Societies Association to try to meet the hon. Gentleman's points. I will not conceal that, before those meetings had taken place, my intention was to advise the House not to accept the new Clause. It was only as a result of those discussions, when I learned that the Building Societies Association was in favour of the hon. Gentleman's proposals, that I changed my mind and was prepared to recommend them to the House.
The question then was whether we could put in a manuscript amendment in time to put the matter right. There would have been difficulties and it would not have been of service to the House to put down an amendment in that form in a great rush. Indeed, the hon. Member for Croydon, South conceded that these clauses would not have any practical effect in the near future. By the time that we managed to bring them forward the situation is unlikely to have changed very much. It do not think that the hon. Gentleman is losing anything at all.

Mr. William Clark: I am grateful for the support given to me by my right hon. Friend the Member for Crosby (Mr. Page). I do not say this in a carping way—I know about the difficulties of printing and so on—but I think that from 13th June, when the matter was first raised and the undertaking was given, the Treasury could have started its discussions with the building societies earlier. I have no vested interest.
In view of the categoric assurance from Government and the categoric assurance from my right hon. Friend the Member for Carshalton (Mr. Carr), who is the Opposition spokesman on Treasury matters, we cannot lose whichever—[Interruption.] Hon. Gentlemen opposite should get their facts right before they distort them. I was about to say that we cannot lose because, whichever party wins the General Election, the building societies have a categoric assurance from both sides on this matter. Therefore, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New Clause 30

VEHICLE EXCISE DUTY: EXEMPTION FOR THE DISABLED

'A mechanically propelled vehicle fitted with controls enabling it to he driven by persons having a particular disability or a vehicle for use by persons having a particular disability that so incapacitates them in the use of their limbs that they have to be driven and cared for out doors by an attendant and registered in the name of such a disabled person under the Vehicles (Excise) Act 1971 shall not be chargeable with any duty under that Act by reason of its use by or for the purposes of that disabled person or by reason of its being kept for such use where—

(a) he caused the controls to be fitted to the vehicle and obtained in respect of the cost thereby incurred a grant paid by the Secretary of State out of moneys provided by Parliament; or
(b) whether or not he caused the controls to be fitted to the vehicle his disability is of the kind in the case of which grants in respect of the fitting of such controls are so paid; or
(c) the disabled person is in receipt of a badge issued pursuant to section 21 of the chronically sick and disabled persons Act 1970, is in receipt of an attendance allowance under the National Insurance Act 1971 and 1972, or the equivalent constant attenance allowance of the Industrial Injuries Scheme, and the disabled person needs the use of a wheel chair and has attained the age of 16 and where the disabled person is sufficiently disabled to be eligible under the National Health Service Act 1946 and the Health Services and Public Health Act 1968 for an invalid tricycle but too disabled to drive it,
and where regulations under section 23 of the Vehicles (Excise) Act 1971 requires a person to furnish particulars as to a vehicle exempted from duty by this section, they may require him to furnish in addition such evidence of the facts giving rise to the exemption as is prescribed by the regulations '.—[Mr. Higgins.]

Brought up, and read the First time.

Mr. Higgins: I beg to move, That the clause be read a Second time.
This proposal to amend the Finance Act 1971 has a long history. The clause, which has been drafted to make further progress, is extremely long. The drafting is rather complex. Therefore, I should like to refer to some of its specific provisions. At the same time, it may be possible to simplify the drafting. I will comment on that point again later.
Over the years the House has seen fit to extend the relief given to the disabled regarding the payment of vehicle excise duty. My hon. Friend the Member for

Banbury (Mr. Marten) has been very much in the forefront of this campaign. Indeed. he moved an amendment similar to the clause when we were in Government and it is part of the legislation which is embodied in the 1971 Act.
A considerable campaign has also been launched by the Joint Committee on Mobility for the Disabled, particularly its chairman. Mr. Peter Large. He has always put forward his representations with great cogency and a great deal of humanity.

Mr. Neil Marten: And with moderation.

Mr. Higgins: Indeed, as my hon. Friend said, with moderation. He has been anxious that we should not create a situation where any concession to this deserving group would lead to abuse. This has also been the concern of successive Treasury Ministers. Therefore, it is right that we should have made gradual progress in this area moving by stages. The new clause seeks to move one stage further in the light of the changes which were brought about in the 1971 Act and the 1972 Act, which made a further extension.
We are seeking to extend to more disabled passengers the relief which has hitherto been given. The number of permits issued by the Department of Health and Social Security for disabled passengers is probably over 1,000—perhaps 1.100. The Financial Secretary may be able to give us the up-to-date figure. Under the provisions of Section 7 of the 1971 Act the figure is probably about 500. Again, the hon. Gentleman may be able to confirm that.
The 1971 Act was deliberately designed to ensure that the change was such that it was not open to abuse. We felt then, I think rightly, that the concession ought to be limited to what are called conspicuous and permanent alterations to a vehicle which would make it identifiable. None the less, in February 1972 the invalid vehicles service was extended to cover certain chest and heart cases, and these disabled drivers were allowed exemption even though their cars were unadapted. Generally speaking, it was felt that, even though a vehicle was not clearly identifiable for the use of a disabled person, arrangements could be made to administer the concession on a satisfactory basis which would not be open to abuse.
The clause seeks to extend the concession still further and to remove some of the limitations which have previously been imposed. A particular disabled person may go into a vehicle which is not conspicuously converted, perhaps because he is in a wheelchair and his assistant can get him into the vehicle in that way. None the less, in the hope that the clause will be acceptable to the Government, we have imposed certain restrictions which, to some extent, reflect the changes in the law regarding the treatment of vehicles for the disabled. I think that would have been more difficult at an earlier stage.
I referred earlier to the restraints that we have imposed. For example, in paragraph (a) we refer to
the controls to be fitted to the vehicle and obtained in respect of the cost thereby incured a grant paid by the Secretary of State out of moneys provided by Parliament; or
(b) whether or not he caused the controls to be fitted to the vehicle his disability is of a kind in the case of which grants in respect of the fitting of such controls are so paid;
(c) the disabled person is in receipt of a badge issued pursuant to Section 21 of the Chronically Sick and Disabled Persons Act 1970",
that he shall be over 16 years of age, and so on.
I hope that those restrictions commend themselves to the House. At the same time they extend the relief to many people, probably many more than the two figures I mentioned earlier. Perhaps the Financial Secretary will give us his estimate of the number likely to benefit from the concession.
Having simply recounted the history of the matter, I hope that I have moved the House to accept the views I have put forward. The Financial Secretary has been courteous enough to communicate with me. I understand that the Government are not unsympathetic to my arguments, but that they are somewhat unhappy about the drafting of the new clause. In contrast with my rather lengthy proposal, they have suggested that our purpose might be achieved in a much shorter way by amending Section 7 of the Finance Act 1971, substituting "suitable" for "specifically and extensively adapted", and omitting the words from conspicuous" to "and where". That is a much more elegant way of doing it than the almost three-

quarters of a page of typescript that I have produced with much labour.
I think that our proposal is not defective, but that the Government would much prefer it in the form I have described. If I table a much more abbreviated proposal which appears to meet the case, perhaps the hon. Gentleman will be kind enough to confirm that it covers exactly the same ground and will not exclude anyone now covered by my much lengthier new clause. Perhaps the Government will then be prepared to accept the shorter version.
8.30 p.m.
However, we find ourselves in a difficulty of which I was not aware. I understand that one of the few things we cannot do is to move a manuscript new clause on Report, although we can move manuscript amendments on Report, and can move new clauses at times other than Report. If the hon. Gentleman accepts my arguments, I hope that the Government may be prepared briefly to allow a recommittal at the end of the Report stage so that we may meet this point.
I hope that the clause commends itself to the House. I am sure that it will help a deserving group of people to whom it is appropriate that relief should be extended.

Mr. Marten: I support the new clause. I gather that my hon. Friend the Member for Worthing (Mr. Higgins) has received an indication that the Government may accept its theme and make a slightly shorter job of it than my hon. Friend painstakingly did in his drafting. On the assumption that the Government will accept it, I thank them very much.
This is a wonderful example of the tortoise's progress for the disabled in the House, which has been going on since about 1964. We have had one or two victories, and here is another I hope that in the fullness of time, when the Government's decisions on the Sharp Report are announced, there will be a big review of all these matters so that we may take a great leap forward in help for the disabled.

Mr. William Molloy: I hope that my hon. Friend the Financial Secretary will heed what is said by hon. Members on both sides of the House. Many of us have been concerned with


all forms of disabled organisations. No one has made a more outstanding contribution, particularly for the disabled driver, than the hon. Member for Banbury (Mr. Marten). I have considered it an honour to work with the hon. Gentleman on many occasions since 1964 in advancing the case of disabled people. I think particularly of the Disabled Drivers Association, with which we are both connected.
I remember our endeavours under the previous Government. Conservative Members now look so comfortable on the Opposition benches that I hope they will be there for a long time. Under the present Government, we have much more hope that in reply to the cases we advance we shall not receive detailed technical arguments—masses of sympathy, but no action. I hope that I shall not have to say that, although we have a different Government, we are still hearing the same story. Back benchers on both sides of the House want to see such a provision introduced to enrich the lives of many people who, because of their disability, cannot enjoy the normal way of life that the rest of us enjoy. I believe that that is the point of view of the mass of back benchers on both sides of the House. It is for that very good reason, therefore, quite apart from humanitarian considerations, that we hope that this provision will be met by a practical response from my hon. Friend the Financial Secretary.

Mr. David Weitzman: I wish to add a few words in support of the new clause. Over the long years during which I have been a Member of this House, I have always been struck by the fact that, whenever the Opposition have moved very important amendments to Finance Bills, they have always received a tremendous amount of sympathy and finally the Government's answer has been, "We have not the money. We cannot do it." That was the situation time and time again during the last Parliament. Certain amendments were moved which would have greatly assisted the disabled. They were resisted strongly by the Conservative Government on the ground that the money was not available.
This is a very worthy new clause. It helps the disabled, and it is very important

that they should be helped in every way possible. I hope that the Government will do all that they can to see that what is intended in it is put into effect.

Mr. Bowden: I hope that the hon. and learned Member for Hackney, North and Stoke Newington (Mr. Weitzman) will not think that I am being too cynical if I say that the difference between the situations from 1964 to 1970 and from 1970 to 1974 and that today is that we now have a minority Government and it is much easier for back benchers to bring pressure to bear in favour of a very worthy new clause at such a time.
Both sides of the House have earned a great deal of credit in this matter. Only today I was talking to representatives of the Brighton and Hove branch of the British Rheumatism and Arthritis Association. I referred to this new clause and said that I felt that there was a good chance of it being accepted by the Government. Although we have not had an actual acceptance yet, I hope very much that it is a foregone conclusion.
I congratulate my hon. Friend the Member for Worthing (Mr. Higgins) on his drafting of the new clause. I look forward to hearing the Financial Secretary saying that he accepts the principle behind it. I believe that a very large number of my constituents and many people throughout the country will be grateful to this House for incorporating this new clause into the Bill.

Sir Raymond Gower: Disregarding the respective statements by hon. Members on both sides of the House as to who is the more virtuous, I hope that the Government will accept the new clause.
I appreciate that at no time do any Government find it easy to undertake to make concessions of this nature, and I realise that we are not discussing a small amount of money. Nevertheless, I feel that concessions of this kind have a very high priority. Even in circumstances of some economic difficulty they deserve special treatment. In that context, I hope that the new clause will be accepted.

Dr. Gilbert: Perhaps I may start by assuring the hon. Member for Brighton, Kemptown (Mr. Bowden) that the Government are very happy to accept the new clause. I assure him, too, that we


would have been happy to accept it. whatever the figures in the Division Lobby, simply because it is clear that the present law contains an unsupportable anomaly in that disabled drivers may be exempted from vehicle excise duty without their vehicles being modified, which was the original requirement of the Department of the Environment, but that disabled passengers, who may be able to travel without any need for the vehicle to be modified, have to have that vehicle modified to meet the test for exemption from duty. On the face of it, that is nonsense, and I cannot see any Government resisting a proposition like this once it is put to them on the Floor of the House.
I am grateful to the hon. Member for Worthing (Mr. Higgins) for the courteous way he put his remarks. I believe we have reached agreement on the technicalities of handling the matter and, if it is agreeable to whomsoever is in the Chair at the time, I would hope that when we reach the end of our proceedings on the Report stage we can have a brief re-committal motion which could produce the precise effect intended by the hon. Gentleman incorporated in words which he has been good enough to say were more elegant than his own.
He asked several questions about the numbers who would be involved in a provision of this kind and the numbers already benefiting. I came armed with many figures but unfortunately I do not appear to have those for which the hon. Gentleman has asked, which would be a remit of a kind more for the Department of Health and Social Security than for the Treasury, but I can certainly tell him that so far only about 1,000 people have applied to the DHSS for a certificate of exemption, and between 40 per cent. and 50 per cent. have been refused on the ground that the vehicle was not conspicuously modified.
This may be a reflection of the fact that the exemption is not as well known to the public as it might be and as we would hope it would be. It may also be a reflection of the fact that a great many individuals who are in receipt of constant attendance allowance are among the less-well-off section of the com-

munity and therefore, unfortunately, not in a position to contemplate running a car.
I am always hesitant about rejecting compliments particularly when they come from the other side of the House, but I feel I would be misleading the House if I were to let it get away with the impression that the hon. Member for Barry (Sir R. Gower) was suggesting, that this was a concession which will cost a great deal of money.

Sir R. Gower: I did not say that.

Dr. Gilbert: Then I misunderstood the hon. Gentleman. I thought he did. The cost involved in this is minimal. Unless there is any other point to which any hon. Gentleman would wish me to address myself, we will leave it at that. We entirely accept the new clause. I am advised that the form of words we are offering the hon. Member for Worthing in no way dilutes the intention of his own new clause, and I hope we may leave it at that.

Mr. Higgins: Soon after I entered the House about 10 years ago I put down a Question to the Prime Minister which turned out to be No. 1. To my astonishment as a new Member, the answer to my Question asking him to do something was "Yes, Sir" which so totally surprised me that all I could say as a supplementary was "Thanks very much", which some of my hon. Friends did not think was as effective a supplementary as I might have employed.
On this occasion I find myself in much the same situation, and it would be appropriate to follow the course which has now the general agreement of the House and to ask leave to withdraw the new clause as it is tabled and to allow it to be retabled in the more elegant form which has been suggested. We can then return to the recommittal stage when we have finished the Report stage. I am most grateful to the Financial Secretary. I should like to pay tribute to him for the concession he has made. I beg to ask leave to withdraw the motion.

Motion, and clause, by leave, withdrawn.

Clause 2

INCREASE OF CERTAIN DUTIES ON BETTING

8.45 p.m.

Mr. Reginald Eyre: I beg to move, in page 3, line 28, at end insert:
except in the case of bets made by way of pool betting in respect of a competition for prizes held by—
(a) the holder of a licence under the Pool Competitions Act 1971, or
(h) any person approved by the Secretary of State in that behalf on the recommendation of the Gaming Board for Great Britain,
in respect of which the amount of the pool betting duty shall be 33⅓ per cent.'
I intend to speak briefly in moving the amendment in my name and that of my hon. Friend the Member for Coventry, South-East (Mr. Wilson), because I believe the case in its support is well known to right hon. and hon. Gentlemen on both sides of the House. The Financial Secretary showed his interest in and sympathy for the case when he recently received a deputation attending on behalf of a group of sports supporting pools.
The first point I would stress is that the benefit of this amendment—a modest reduction in the rate of pool betting duty from 40 per cent. to 33⅓ per cent.—would be restricted to those societies promoting pools for the purpose of raising badly-needed funds to sustain sporting organisations and charities. My own special sympathy is for the Warwickshire Cricket Supporters Association, because its pool promotion enables it to help cricket groups all over the country through grants and loans.
I am also glad that this amendment would aid several similar organisations supporting famous football clubs as well as charities serving worthy causes. I stress the great difference between these pools and commercial pools, which would pay the increased duty of 40 per cent. Those commercial pools pay out huge prizes, and they can afford the higher rate of tax.
I believe that the Government mistakenly overlooked the plight of the sports-supporting and charity-supporting pools when the increase was planned. The amendment gives the Government the opportunity to correct that oversight.
When pool betting duty was increased from 25 per cent. to 33⅓ per cent., sports-supporting and charity-supporting pools suffered a considerable reduction in takings. They are now struggling to survive and continue their good work. They pay out modest prizes and therefore have difficulty in maintaining their attraction to supporters, especially in view of the heavy increase that has taken place in administrative expenses over the past year or two.
We know that the whole question of financing sport and charitable causes is under review. I submit that in the meantime there is an urgent need to keep these organisations in being. I confidently plead with the Financial Secretary to accept this amendment, which has strong support on both sides of the House.

Mr. William Wilson: I support this amendment, and I must do so first by declaring an interest. I am the proud possessor of 121 25p shares in Coventry City Football Club—one of the clubs which benefit from the pools which are the subject of this amendment. Suffice it to say that those shares have never paid a dividend and are never likely to do so. They were purchased when Coventry City was in the bottom half of the Fourth Division, and although we are now in the dizzy heights of the First Division the prospect of a dividend is as far away as ever.
The greatest political insult I ever received was at the time of the last General Election when, wearing my red and white Labour Party ribbons in Coventry, I was asked by a small child whether I was a supporter of Manchester United.
There are two points which need to be considered in relation to this amendment and the Clause. First, are the pools concerned worthy of support and recommendation? Second, if the Bill goes through as it stands, is the clause likely to produce more or less tax for the Exchequer? The pools which we seek to help are not run for private profit or individual gain; they all contribute to the sporting fraternity and well-being of sporting clubs. Obviously they are entitled to support.
Anyone who studies the problem can see clearly that the Chancellor is likely to finish up with less revenue rather than more unless—I enter this simple proviso


—he says, "I am ready to soak Little-woods and Vernons and I do not mind what happens to sporting clubs and their pools." If he says that, we know where we are. Otherwise, the situation is clear—less revenue will be secured.
The Chancellor should appreciate that when the tax was increased from 25 per cent. to 33; per cent. a number of pools helping sporting clubs went out of existence. More have given up since the 40 per cent. rate was imposed. The writing is on the wall.
Let me explain what happened to Coventry City Football Club pool. It started in January 1967, and had the object of providing better facilities for football in Coventry and of improving the ground and club facilities, which are admirable objects. We were making £80,000 a year, all of it ploughed back into the club and its facilities. That was the beginning. When the tax was increased to 33⅓ per cent. the figure ploughed back was £50,000–60,000 per year. Now that the rate has risen to 40 per cent., to the pool helping Coventry Football Club is losing £200 per week. Obviously, we cannot go on in that way much longer. The Coventry City pool, which was one of the best in the country, is drying up. With inflation, the cost of running the pool, and now the increased tax, £200 per week is being lost. Those are the simple economics of the situation.
The kindest thing I can say about the Bill's proposal affecting the football club pools is this: no one thought it through to the logical end, or could really see what was going to be achieved. Surely it was not the intention of the Chancellor that after they ceased to make a profit the pools supporting football clubs should be dealt with in this way. It is unfortunate that those helping football clubs are being hampered in this way.
I urge the Financial Secretary to accept the amendment. The difference it will make to his revenue is neither here nor there. If he accepts this amendment he will probably finish up with more revenue.

Dr. Gilbert: I have listened with close attention to the eloquent speeches of my hon. Friend the Member for Coventry, South-East (Mr. Wilson) and the hon. Member for Birmingham, Hall Green (Mr. Eyre).
I accept that sporting and charitable pools are now facing difficult times. I accept that they are faced, as are other forms of economic activity, with a situation in which expenses and taxes are rising and revenues are falling because of the difficulties in selling tickets. I listened with considerable sympathy to the remarks of the two hon. Members. Unfortunately, I do not think that I can be as forthcoming as I would wish in response to their representations.
My hon. Friend the Member for Coventry, South-East, rightly in my view, suggested that the effect of the Finance Bill would be to produce less revenue for the Treasury from sporting and charitable pools. I would not resist that case very strongly, but my hon. Friend did not address himself to the consideration which Treasury Ministers have to have—whether the effect of his proposal would not also be to produce less revenue for the Treasury, in this case in terms of revenue from the commercial pools.
The effect of the amendment would be to create a tax privilege position as between sporting and charitable pools on the one hand and the commercial pools on the other, and it follows that it would be easier for those pools, whose case my hon. Friend has been arguing, to offer prizes which would be a higher proportion of the stake money than would be the case with commercial pools. That is unarguable, and the consequence would be that the modest punter would be tempted to switch his custom away from the commercial pools to the non-commercial pools.

Mr. Arthur Lewis: All the better.

Dr. Gilbert: So be it, but I am addressing myself solely to the question of the net effect on the revenue, and there would be a good chance that the result of what is suggested, in its net effect would be a considerable loss to the Treasury. I should make it clear that some of the pools whose case hon. Members have argued are very big business. The larger so-called charitable pools have a gross revenue considerably in excess of all but a couple of the commercial pools. The loss to the revenue could be considerable.
As the hon. Member for Birmingham, Hall Green said, I received a deputation—I hope. sympathetically—a 'week ago.


I listened carefully and we had a long discussion, which I hope the members of the deputation considered effective and detailed. I undertook to examine their case and asked them to let me have much more information. I have had a certain amount of information from one of the members of the deputation and I hope to get much more in due course. It would not be right for me to reveal everything contained in that communication, but I must tell the House that, so far, it has not met what I had in mind in terms of detailed financial information as to the effect of the proposed tax on individual pools and their costs and revenues.
The law at present is in a very unsatisfactory state with regard to the pools. I see the right hon. Member for Crosby (Mr. Page) in his place. I hope he will not mind if I refer to him as the joker in the pack in this situation, because his contribution, in terms of the Local Revenue Bill, has been to make a confused situation considerably more confused.
We are still considering the interdepartmental working party's report on lotteries generally. The report was published last December, as Cmnd. 5506, and we have not yet been able to complete our consideration of it. It suggested that the long-term interests of charitable and sporting pools might lie along the general line of promotion of lotteries. It also envisaged two-tier lotteries, the smaller type being duty-free and the larger ones paying the full rate of duty. This concept may have to be modified as a result of the progress of the legislation sponsored by the right hon. Gentleman.
9.0 p.m.
We sympathise with the difficulty here. The sporting pools hold a privileged position, as I am sure they would be the first to recognise. It is impossible for any outsider to join the group. I recognise that paragraph (b) is probably intended to deal with that difficulty in respect of the preceding words:
except in the case of bets by way of pool betting in respect of a competition … held by any person approved by the Secretary of State in that behalf".
That might be intened to extend the membership of that select group, but its

effect is highly uncertain, and new competitions on the same lines as those already registered under the Act would fall to be regarded as lotteries and, as such, unlawful under the Betting, Gaming and Lotteries Act—

Mr. Eyre: Of course, if on technical grounds the Minister sought to improve the wording of paragraph (b), I am sure that the hon. Member for Coventry, South-East (Mr. Wilson) and I would be glad to agree.

Dr. Gilbert: I am obliged. I was not resisting the proposal on technical grounds, but simply pointing out the effect in substantive terms. Without paragraph (b) we should still perpetuate a priviliged fiscal arrangement for a small group of pools which run only a few football clubs—about a dozen or so—although I recognise that the Warwickshire Cricket Club pool spreads its benefits widely over sport in different parts of the country.
Although I have great sympathy for this proposal, I should need to see in greater detail than I have so far the immediate financial implications, for the pools, of my right hon. Friend's proposals. The most satisfactory way to proceed is by a general review of the law in this regard, which, it will be agreed, is very confused. I recognise that this is an argument for delay and will not satisfy the hon. Gentleman, who wants action immediately. I hope that he will accept that I have tried to consider the amendment as sympathetically as possible but unfortunately am unable to be as forthcoming as I have been able to be with the House on previous amendments.

Mr. R. Carr: No one knows better than someone who has been Home Secretary what a mess this whole field of lotteries and so on is in and the need for rationalisation. It was when I was Home Secretary that the inter-departmental working party report was published. I hope that that leads quickly to some conclusions by the Government about the proper structure of law in this area. So I speak from a clear knowledge of and feeling about the present muddle and the need for reform.
But it is just because I am conscious that the present position can last for only a short time that I find the Financial


Secretary's arguments wholly unconvincing. He has not opposed the amendment because of the great direst cost involved. In fact, he said in Committee that the total direct cost of removing the duty altogether would be about £7 million, whereas the proposition is not to remove the proposed 40 per cent. duty altogether but to reduce it from a proposed 40 per cent. to the existing rate of 33½ per cent. or whatever it is. The direct cost of the amendment, therefore, is very small.
What we have to assess is the weight which we ought to attach to the Financial Secretary's fear that this may lead to a substantial indirect cost because these privileged pools will take advantage in the future of their differential rate of duty to make themselves so attractive that they will attract an enormous amount of business from the commercial pools and, therefore, the Exchequer will lose revenue from the commercial pools. When we examine that proposition we see that it is a typical Treasury argument of the least convincing kind.
The House will notice that paragraph (a) of the amendment is couched in terms of licensing under the Pool Competitions Act 1971. I forget exactly when that Act runs out, but it is an interim Act with a fixed term. Therefore, the Government will, in any event, have to legislate in this field on a permanent basis—I think within a couple of years—whatever Government are in power.
Therefore, the maximum amount of time that these privileged pools under this temporary Act have in which to redress their affairs and attract all this business away from commercial pools is at most about a couple of years. They will not do that. It is not worth it in the time involved. Moreover, they know that as they have a maximum of two years life, if they were to start to do that they would not be in a very popular position with the Government of the day, of whichever party they may be, in getting suitable arrangements to replace the 1971 Act.
I suggest, therefore, that the fear that the Financial Secretary expresses about the privileged pools using, if we allowed the amendment to go through, differential rates of duty to attract a large amount

of business from the commercial pools is more a figment of the imagination, a sort of fevered fear on the part of the Treasury, than something based on any hard reality. What is more, we heard a great deal from the Financial Secretary about another Finance Bill that is coming, he hopes, in the near future. If that happens, or if we do not have another Finance Bill until next April or May, or whatever the normal time is, there is not all that long a period. If this fear proved to have substance, the door could be closed at that stage.
This is an imagined fear and not a real fear. This whole area of legislation must be amended in the near future, partly because of the basic need and partly because the 1971 Act comes to an end anyhow within the next couple of years. Why should these beneficial pools be hit and suffer, and why should sport, recreation and certain charities suffer, in the meantime? If the Government maintain their position, I am afraid that I must advise my right hon. and hon. Friends to support the amendment in the Division Lobby.

Mr. Graham Page: I join with my right hon. Friend the Member for Carshalton (Mr. Carr) in giving that advice.
The Financial Secretary kindly referred to what he called the joker in the pack—the Bill on local lotteries. I sought no advantage to local authorities over the sports pools or charitable pools in initiating that legislation. I should be very pleased to see an advantage to the sports pools as against local lotteries. I should like to see the differentials between 40 per cent. and 33½ per cent., to give that little edge on it for the sports pools. This seems the entirely wrong moment to increase taxation on those pools when the clubs concerned are having difficulties. I ask the Financial Secretary not to use the Bill which I have introduced as an argument against the amendment.
The problem is that of getting on with the job of legislating for lotteries. The Financial Secretary said that the report he mentioned had been published last December. The Government have therefore had a long time to consider it and indeed Civil Servants have had this matter before them for much longer and are ready with advice, as they were last December.
To leave the existing tax on the sports pools and not to increase it will not mess up legislation on the law on lotteries. The action suggested can be taken pending the massive reform of lotteries. Let us give a little advantage now and not increase the

taxation at this time when these pools are having difficulties.

Question put, That the amendment be made:—

The House divided: Ayes 291, Noes 274.

Division No. 84.
AYES
[9.13 p.m.


Adley, Robert
Elliott, Sir William
Jones, Arthur (Daventry)


Aitken, Jonathan
Emery, Peter
Jopling, Michael


Alison, Michael (Barkston Ash)
Eyre, Reginald
Joseph, Rt. Hn. Sir Keith


Allason, James (Hemel Hempstead)
Fairgrieve, Russell
Kaberry, Sir Donald


Amery, Rt. Hn. Julian
Farr, John
Kellett-Bowman, Mrs. Elaine


Ancram, M.
Fell, Anthony
Kershaw, Anthony


Archer, Jeffrey
Fenner, Mrs. Peggy
Kilfedder, James A.


Atkins, Rt. Hn. Humphrey (Spelthorne)
Fidler, Michael
Kimball, Marcus


Awdry, Daniel
Finsberg, Geoffrey
King, Evelyn (Dorset, S.)


Balniel, Rt. Hn. Lord
Fisher, Sir Nigel
King, Tom (Bridgwater)


Banks, Robert
Fletcher, Alexander (Edinburgh, N.)
Kitson, Sir Timothy


Bell, Ronald
Fletcher-Cooke, Charles
Knight, Mrs. Jill


Bennett, Sir Frederic (Torbay)
Fookes, Miss Janet
Knox, David


Bennett, Dr. Reginald (Fareham)
Fowler, Norman (Sutton C'field)
Lament, Norman


Benyon, W.
Fox, Marcus
Lane, David


Berry, Hon. Anthony
Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
Langford-Holt, Sir John


Biffen, John
Freud, Clement
Latham, Michael (Melton)


Biggs-Davison, John
Fry, Peter
Lawrence, Ivan


Blaker, Peter
Galbraith, Hn. T. G. D.
Lawson. Nigel (Blaby)


Boardman, Tom (Leicester, S.)
Gardiner, George (Reigate &amp; Banstead)
Le Marchant, Spencer


Body, Richard
Gardner, Edward (S. Fylde)
Lester, Jim (Beeston)


Boscawen, Hon. Robert
Gibson-Watt, Rt. Hn. David
Lewis, Kenneth (Rtland &amp; Stmford)


Bowden, Andrew (Brighton, Kemptown)
Gilmour, Rt. Hn. Ian (Ch'sh' &amp; Amsh'm)
Lloyd, Ian (Havant &amp; Waterloo)


Boyson, Dr. Rhodes (Brent, N.)
Gilmour, Sir John (Fife, E.)
McAdden, Sir Stephen


Braine, Sir Bernard
Glyn, Dr. Alan
MacArthur, Ian


Bray, Ronald
Goodhart, Philip
McCrindle, R. A.


Britlan, Leon
Goodhew, Victor
McCusker, H.


Brocklebank-Fowler, Christopher
Goodlad, A.
Macfarlane, Neil


Brown, Sir Edward (Bath)
Gorst, John
MacGregor, John


Bruce-Gardyne, J.
Gow, Ian (Eastbourne)
McLaren, Martin


Bryan, Sir Paul
Gower, Sir Raymond (Barry)
Macmillan, Rt. Hn. M. (Farnham)


Buchanan-Smith, Alick
Grant, Anthony (Harrow, C.)
McNair-Wilson, Michael (Newbury)


Buck, Antony
Gray, Hamish
McNair-Wilson, Patrick (New Forest)


Budgen, Nick
Grieve, Percy
Madel, David


Bulmer, Esmond
Griffiths, Eldon (Bury St. Edmunds)
Marshall, Michael (Arundel)


Burden, F. A.
Grimond, Rt. Hn. J.
Marten, Neil


Butler, Adam (Bosworth)
Grist, Ian
Mather, Carol


Carlisle, Mark
Grylls, Michael
Maude, Angus


Carr, Rt. Hn. Robert
Gurden, Harold
Maudling, Rt. Hn. Reginald


Chalker, Mrs. Lynda
Hall, Sir John
Mawby, Ray


Channon, Paul
Hall-Davis, A. G. F.
Maxwell-Hyslop, R. J.


Chataway, Rt. Hn. Christopher
Hamilton, Michael (Salisbury)
Mayhew, Christopher (G'wh, W'wch, E)


Clark, A. K. M. (Plymouth, Sutton)
Hampson, Dr. Keith
Mayhew, Patrick (RoyalT' bridge Wells)


Clark, William (Croydon, S.)
Hannam, John
Meyer, Sir Anthony


Clarke, Kenneth (Rushcliffe)
Harrison, Col. Sir Harwood (Eye)
Miller, Hal (B'grove &amp; R'ditch)


Clegg, Walter
Harvie Anderson, Rt. Hn. Miss
Mills, Peter


Cockcroft, John
Hastings, Stephen
Miscampbell, Norman


Cooke, Robert (Bristol. W.)
Havers, Sir Michael
Mitchell, David (Basingstoke)


Cope, John
Hawkins, Paul
Moate, Roger


Cordle, John
Hayhoe, Barney
Molyneaux, James


Cormack, Patrick
Heath, Rt. Hn. Edward
Money, Ernie


Corrie, John
Henderson, J. S. B. (Dunbartonshire, E.)
Monro, Hector


Costain, A. P.
Heseltine, Michael
Moore, J. E. M. (Croydon, C.)


Craig, Rt. Hn. William (Belfast. W.)
Higgins, Terence
Morgan-Giles, Rear-Adm.


Critchley, Julian
Hill, James A.
Morris, Michael (Northampton, S.)


Crouch, David
Holland, Philip
Morrison, Charles (Devizes)


Crowder, F. P.
Hooson, Emlyn
Morrison Peter (City of Chester)


Davies, Rt. Kn. John (Knutsford)
Hordern, Peter
Mudd, David


d'Avigdor-Goldsmid, Maj.-Gen. James
Howell, Rt. Hn. Sir Geoffrey (Surrey, E.)
Neave, Airey


Dean, Paul (Somerset, N.)
Howell, David (Guildford)
Neubert, Michael


Deedes, Rt. Hn. W. F.
Howell, Ralph (Norfolk, North)
Newton, Tony (Braintree)


Dixon, Piers
Howells, Geraint (Cardigan)
Nicholls, Sir Harmar


Dodds-Parker, Sir Douglas
Hunt, John
Normanton, Tom


Dodsworth, Geoffrey
Hurd, Douglas
Nott, John


Douglas-Home, Rt. Hn. Sir Alec
Hutchison, Michael Clark
Onslow, Cranley


Drayson, Burnaby
Iremonger, T. L.
Oppenheim, Mrs. Sally


du Cann, Rt. Hn. Edward
Irvine, Bryant Godman (Rye)
Orr, Capt. L. P. S.


Durant, Tony
James, David
Osborn, John


Dykes, Hugh
Jenkin, Rt. Hn. P. (R'dge W'std &amp; W'fd)
Page, Rt. Hn. Graham (Crosby)


Eden, Rt. Hn. Sir John
Jessel, Toby
Page, John (Harrow, W.)


Edwards, Nicholas (Pembroke)
Johnson Smith, G. (E. Grinstead)
Pardoe, John



Johnston, Russell (Inverness)
Parkinson, Cecil (Hertfordshire, S.)




Pattie, Geoffrey
Shaw, Giles (Pudsey)
Townsend, C. D.


Percival, Ian
Shaw, Michael (Scarborough)
Trotter, Neville


Pink, R. Bonner
Shelton, William (L'mb'th, Streath'm)
Tugendhat, Christopher


Price, David (Eastleigh)
Shersby, Michael
Tyler, Paul


Prior, Rt. Hn. James
Silvester, Fred
van Straubenzee, W. R.


Raison, Timothy
Sims, Roger
Vaughan, Dr. Gerard


Rathbone, Tim
Sinclair, Sir George
Viggers, Peter


Rawlinson, Rt. Hn. Sir Peter
Skeet, T. H. H.
Waddington, David


Redmond, Robert
Smith, Cyril (Rochdale)
Wainwright, Richard (Colne Valley)


Rees, Peter (Dover &amp; Deal)
Smith, Dudley (W'wick &amp; L'm'ngton)
Wakeham, John


Rees-Davies, W. R.
Spence, John
Walder, David (Clitheroe)


Renton, Rt. Hn. Sir David (H't' gd 'ns' re)
Spicer, Jim (Dorset, W.)
Walker-Smith, Rt. Hn. Sir Derek


Renton, R. T. (Mid-Sussex)
Spicer, Michael (Worcestershire, S.)
Wall, Patrick


Rhys Williams, Sir Brandon
Sproat, Iain
Warren, Kenneth


Ridley, Hn. Nicholas
Stanbrook, Ivor
Wells, John


Ridsdale, Julian
Stanley, John
Wiggin, Jerry


Rifkind, Malcolm
Steel, David
Wilson, William (Coventry, S.F.)


Pippon, Rt. Hn. Geoffrey
Steen, Anthony (L'pool, Wavertree)
Winstanley, Dr. Michael


Roberts, Michael (Cardiff, N.-W.)
Stewart, Ian (Hitchin)
Winterton, Nicholas


Roberts, Wyn (Conway)
Stodart, Rt. Hn. A. (Edinburgh, W.)
Wood, Rt. Hn. Richard


Rodgers, Sir John (Sevenoaks)
Stokes, John
Worsley, Sir Marcus


Ross, Stephen (Isle of Wight)
Taylor, Edward M. (Glgow, C'cart)
Young, Sir George (Ealing, Acton)


Rossi, Hugh (Hornsey)
Taylor, Robert (Croydon, N.W.)



Rost, Peter (Derbyshire, S.-E.)
Tebbit, Norman
TELLERS FOR THE AYES:


Royle, Sir Anthony
Temple-Morris, Peter



St. John-Stevas, Norman
Thatcher, Rt. Hn. Margaret
Mr. John Stradling Thomas and


Scott-Hopkins, James
Thorpe, Rt. Hn. Jeremy
Mr. Richard Luce.




NOES


Abse, Leo
Davies, Denzil (Llanelli)
Hardy, Peter


Allaun, Frank
Davies, Ifor (Gower)
Harper, Joseph


Archer, Peter
Davis, Clinton (Hackney, C.)
Harrison, Walter (Wakefield)


Armstrong, Ernest
Deakins, Eric
Hatton, Frank


Ashley, Jack
Dean, Joseph (Leeds, W.)
Healey, Rt. Hn. Denis


Ashton, Joe
de Freitas, Rt. Hn. Sir Geoffrey
Heffer, Eric S.


Atkins, Ronald
Delargy, Hugh
Hooley, Frank


Atkinson, Norman
Dell, Rt. Hn. Edmund
Horam, John


Bagier, Gordon A. T.
Dempsey, James
Howell, Denis (B'ham, Small Heath)


Barnett, Guy (Greenwich)
Doig, Peter
Huckfield, Leslie


Barnett, Joel (Heywood &amp; Royton)
Dormand, J. D.
Hughes, Rt. Hn. Cledwyn (Anglesey)


Bates, Alf
Douglas-Mann, Bruce
Hughes, Mark (Durham)


Baxter, William
Duffy, A. E. P.
Hughes, Robert (Aberdeen, North)


Benn, Rt. Hn. Anthony Wedgwood
Dunn, James A.
Hughes, Roy (Newport)


Bennett, Andrew F. (Stockport, N.)
Dunnett, Jack
Hunter, Adam


Bidwell, Sydney
Dunwoody, Mrs. Gwyneth
Irvine, Rt. Hn. Sir A. (L'p'I, EdgeHI)


Bishop, E. S.
Eadie, Alex
Irving, Rt. Hn. Sydney (Dartford)


Blenkinsop, Arthur
Edelman, Maurice
Jackson, Colin


Boardman, H.
Edge, Geoff
Janner, Greville


Booth, Albert
Edwards, Robert (W'hampton, S.E.)
Jay, Rt. Hn. Douglas


Boothroyd, Miss Betty
Ellis, John (Brigg &amp; Scunthorpe)
Jeger, Mrs. Lena


Bottomley, Rt. Hn. Arthur
Ellis, Tom (Wrexham)
Jenkins, Hugh (W'worth, Putney)


Boyden, James (Bishop Auckland)
English, Michael
Jenkins, Rt. Hn. Roy (B'ham, St'fd)


Bradley, Tom
Evans, Fred (Caerphilly)
John, Brynmor


Broughton, Sir Alfred
Evans, Ioan (Aberdare)
Johnson, James (K'ston upon Hull, W)


Brown, Bob (Newcastle upon Tyne, W.)
Evans, John (Newton)
Johnson, Walter (Derby, S.)


Brown, Hugh D. (Glasgow, Provan)
Ewing, Harry (St'ling, F'kirk &amp; G'm'th)
Jones, Barry (Flint, E.)


Brown, Ronald (H'kney, S. &amp; Sh'ditch)
Faulds, Andrew
Jones, Dan (Burnley)


Buchan, Norman
Fernyhough, Rt. Hn. E.
Jones, Gwynoro (Carmarthen)


Butler, Mrs. Joyce (H'gey, WoodGreen)
Fitch, Alan (Wigan)
Jones, Alec (Rhondda)


Callaghan, Jim (M'dd'ton &amp; Pr'wch)
Fitt, Gerard (Belfast, W.)
Judd, Frank


Campbell, Ian
Flannery, Martin
Kaufman, Gerald


Cant, R. B.
Fletcher, Raymond (Ilkeston)
Kelley, Richard


Carmichael, Neil
Fletcher, Ted (Darlington)
Kerr, Russell


Carter, Ray
Foot, Rt. Hn. Michael
Kilroy-Silk, Robert


Carter-Jones, Lewis
Ford, Ben
Kinnock, Neil


Castle, Rt. Hn. Barbara
Forrester, John
Lambie, David


Clemitson, Ivor
Fowler, Gerry (The Wrekin)
Lamborn, Harry


Cocks, Michael
Fraser, John (Lambeth, Norwood)
Lamond, James


Cohen, Stanley
Freeson, Reginald
Lawson, George (Motherwell &amp; Wishaw)


Coleman, Donald
Galpern, Sir Myer
Leadbitter, Ted


Colquhoun, Mrs. M. N.
Garrett, John (Norwich, S.)
Lee, John


Conlan, Bernard
Garrett, W. E. (Wallsend)
Lestor, Miss Joan (Eton &amp; Slough)


Cook, Robert F. (Edinburgh, C.)
George, Bruce
Lewis, Arthur (Newham, N.)


Cox, Thomas
Gilbert, Dr. John
Lewis, Ron (Carlisle)


Craigen, J. M. (G'gow, Maryhill)
Ginsburg, David
Loughlin, Charles


Cronin, John
Golding, John
Loyden, Eddie


Crosland, Rt. Hn. Anthony
Gourlay, Harry
Lyons, Edward (Bradford, W.)


Cryer, G. R.
Graham, Ted
Mabon, Dr. J. Dickson


Cunningham, G. (Isl'ngt'n, S &amp; F'sb'ry)
Grant, George (Morpeth)
McCartney, Hugh


Cunningham, Dr. John A.(Whiteh 'v' n)
Grant, John (Islington, C.)
McElhone, Frank


Dalyell, Tam
Griffiths, Eddie (Sheffield, Brightside)
MacFarquhar, Roderick


Davidson, Arthur
Hamilton, William (Fife, C.)
McGuire, Michael


Davies, Bryan (Enfield, N.)
Hamling, William
Mackenzie, Gregor




McMillan, Tom (Glasgow, C.)




Madden, M. O. F.
Prescott, John
Strauss, Rt. Hn. G. R.


Magee, Bryan
Price, Christopher (Lewisham, W.)
Summerskill, Hn. Dr. Shirley


Mahon, Simon
Price, William (Rugby)
Swain, Thomas


Mallalieu, J. P. W.
Radice, Giles
Thomas, Jeffrey (Abertillery)


Marks, Kenneth
Richardson, Miss Jo
Thorne, Stan (Preston, S.)


Marquand, David
Roberts, Albert (Normanton)
Tierney, Sydney


Marshall, Dr. Edmund (Goole)
Roberts, Gwilym (Cannock)
Tinn, James


Mason, Rt. Hn. Roy
Robertson, John (Paisley)
Tomlinson, John


Meacher, Michael
Roderick, Caerwyn E.
Tomney, Frank


Mellish, Rt. Hn. Robert
Rodgers, George (Chorley)
Torney, Tom


Mendelson, John
Rodgers, William (Teesside, St'ckton)
Urwin, T. W.


Mikardo, Ian
Rooker, J. W.
Varley, Rt. Hn. Eric G.


Millan, Bruce
Roper, John
Wainwright, Edwin (Dearne Valley)


Miller, Dr. M. S. (E. Kilbride)
Rose, Paul B.
Walden, Brian (B'm'ham, Ladywood)


Mitchell, R. C. (S'hampton, Itchen)
Ross, Rt. Hn. William (Kilmarnock)
Walker, Harold (Doncaster)


Molloy, William
Rowlands, Edward
Walker, Terry (Kingswood)


Moonman, Eric
Sandelson, Neville
Watkins, David


Morris, Alfred (Wythenshawe)
Sedgemore, Bryan
Weitzman, David


Morris, Charles R. (Openshaw)
Selby, Harry
Wellbeloved, James


Morris, Rt. Hn. John (Aberavon)
Shaw, Arnold (Redbridge, Ilford, S.)
White, James


Moyle, Roland
Sheldon, Robert (Ashton-under-Lyne)
Whitehead, Phillip


Murray, Ronald King
Shore, Rt. Hn. Peter (S'pney &amp; P'plar)
Whitlock, William


Newens, Stanley (Harlow)
Short, Mrs. Renée (W'hamp'n, N.E.)
Willey, Rt. Hn. Frederick


Oakes, Gordon
Silkin, Rt. Hn. John (L'sham, D'ford)
Williams, Alan (Swansea, W.)


Ogden, Eric
Silkin, Rt. Hn. S. C. (S'hwark, Dulwich)
Williams, Alan Lee (Hvrng, Hchurch)


O'Halloran, Michael
Sillars, James
Williams, Rt. Hn. Shirley (H'f'd &amp; St'ge)


O'Malley, Brian
Silverman, Julius
Williams, W. T. (Warrington)


Orbach, Maurice
Skinner, Dennis
Wilson, Alexander (Hamilton)


Ovenden, John
Small, William
Wilson, Rt. Hn. Harold (Huyton)


Owen, Dr. David
Smith, John (Lanarkshire, N.)
Woodall, Alec


Padley, Walter
Snape, Peter
Woof, Robert


Palmer, Arthur
Spearing, Nigel
Wrigglesworth, Ian


Park, George (Coventry, N.E.)
Spriggs, Leslie
Young, David (Bolton, E.)


Parker, John (Dagenham)
Stallard, A. W.



Parry, Robert
Stewart, Rt. Hn. M. (H'sth, Fulh'm)
TELLERS FOR THE NOES:


Pavitt, Laurie
Stoddart, David (Swindon)



Pendry, Tom
Stonehouse, Rt. Hn. John
Mr. James Hamilton and


Phipps, Dr. Colin
Stott, Roger
Mr. Ernest G. Perry.


Prentice, Rt. Hn. Reg
Strang, Gavin

Question accordingly agreed to.

Clause 5

VALUE ADDED TAX—TIME OF SUPPLY

Dr. Gilbert: I beg to move Amendment No. 2, in page 3, line 42, after 'effect' insert:
'and be deemed always to have had effect'.
The amendment seeks to restore to the clause its original intention by reinstating words deleted from it in Committee on an amendment moved by the hon. and learned Member for Dover and Deal (Mr. Rees). I will not detain the House for long, but it is desirable that I should explain briefly the background of the amendment to hon. Members who were not present in Committee.
It is fair to say, in the light of what was said on both sides of the Committee and of the House in the debates on the 1972 Finance Bill—which is what got us into these difficulties—that it was Parliament's clear intention at the time that VAT should be applied—[Interruption.]—

Mr. Deputy Speaker (Mr. George Thomas): Order. The hon. Gentleman is entitled to be heard in silence.

Dr. Gilbert: —it was Parliament's clear intention that VAT should be applied from 1st April 1973 to charges for the hiring of goods whether or not hire agreements had been concluded or the goods delivered to the customer before that or any other date. That was the proposal put before the House by right hon. and hon. Gentlemen opposite, and it will be within the recollection of the hon. Member for Worthing (Mr. Higgins) who introduced the 1972 Bill.
The proposal was not readily accepted by those of us who were in opposition at that time, because it involved an element of double taxation on those hired goods which had previously borne purchase tax. After two debates and a Division, the proposal was carried, and both sides understood it to be the intention of the Bill. That intention has been largely fulfilled.
I assure the House that the great majority of traders have been fully accounting for and paying tax on those supplies. The impression was given by some speeches in Committee and else-here that there had been widespread seeking of legal advice and widespread withholding of tax as a result of legal advice received. Those impressions are quite


unfounded. Indeed, I go further and assure the House that since the debate in Committee I have received representations from certain quarters of industry, namely, the Equipment Leasing Association, which positively urged that the words I have moved should be restored to the clause, because tax has already been paid on that basis, and the unscrambling of the situation between suppliers and customers would be troublesome and an extremely unwelcome process.
It will be within your recollection, Mr. Deputy Speaker, that in February this year the London VAT Appeal Tribunal gave a decision on appeals brought by three large television hire concerns that in its interpretation of the wording of Section 7(8) of the 1972 Finance Act VAT was not chargeable on goods supplied on hire and delivered to customers before 27th July 1972, the date of the Royal Assent to that Act.
It can be reasonably assumed that a distinction between hirings before 27th July 1972 and hirings on or after that date was not in the minds of anyone who participated in the 1972 debates in respect of VAT either in Committee of the whole House or in Committee upstairs. Hon. Members who were present will recall that a measure of relief on double taxation on television sets was provided after full debate on the basis that rental under all agreements entered into before 1st April 1973—not the relatively small proportion of cases in which the agreement was made and the set installed between 27th July 1972 and 31st March 1973—would be liable to VAT from 1st April 1973 onwards. That relief was provided in Section 48 of the 1972 Act and reduced the tax base to which, as was understood on both sides, the tax was to apply.
What is now Clause 5 of the Bill was introduced as the only feasible course to restore the original intention of the legislation brought forward by the Conservative Government and to validate what had been happening since April 1973, in the great majority of cases affected, in the belief that the legislation had achieved its Intention.
9.30 p.m.
If the amendment passed in Committee is allowed to stand, the effect will be that the tax will not become chargeable on these supplies until the date of Royal

Assent to the current Finance Bill. The cost of that to the Exchequer would be substantial. Apart from television rental, hiring charges for other kinds of goods, such as motor vehicles, computers, office equipment, domestic appliances, furniture, carpets, linen, gaming machines and many other items, would be affected. At a rough estimate we would say that in respect of hirings to non-taxable persons from 1st April 1973 to date about £50 million of tax could be involved. If it is not possible to resist the proposal that the tax will be relieved retrospectively from services, the amount could be more than double—namely, about £120 million. If we take into account hirings to taxable persons who deduct as input tax the VAT charged to them, the amount involved becomes substantially greater.
In moving the amendment in Committee the hon. and learned Gentleman pointed out that the Commissioners of Customs and Excise had an appeal pending and said that it would be improper for the Executive to over-ride the decision of the courts in relation to a particular case before the possibilities of appeal were exhausted. With respect, the position is not as simple as the hon. and learned Member has represented. The Commissioners are unavoidably placed in some difficulty. If they won their appeal to the Divisional Court, the television rental companies might be expected to take the matter further and the issue might not be finally resolved for another year, or possibly longer. If, on the other hand, the Customs and Excise lost the appeal, they might feel entitled to take the matter to a higher court. This might well be the outcome of our proceedings here this evening, and I shall not conceal that from hon. Members.
The hon. and learned Gentleman criticised the official statement and particularly the statement that the effect of the clause—and I quote from the statement—
… is to correct the uncertainty created by a recent decision of the London Value Added Tax Tribunal.
I make clear that we make no apology for that statement. The tribunal's decision must have had the effect of creating uncertainty in the minds of many traders who were accounting for tax on hiring charges in the way in which they and the House had all along intended the 1972 Act should operate. Traders were


bound to be uncertain whether the decision extended as widely as it appeared to do and whether, if it did, it could be reconciled with equitable treatment, for VAT purposes, of hirings as compared with other transactions which had taken place from 1st April 1973.
Furthermore, legal processes could be expected to last for a year or more. At that time if the final decision were given to sustain the VAT tribunal decision, the administrative operation, which is already extremely formidable, in collecting arrears would be further complicated.
The right hon. Gentleman in good humour this evening suggested that before long he might introduce a Budget. I do not seek to trade jests with him for this is a serious matter. If he finds himself responsible for a Finance Bill in the near future, he will face a serious problem in seeking to administer the relief afforded in Standing Committee. I assure him that it is no joke.
The hon. Member for Cornwall, North (Mr. Pardoe) implied in Committee that there would be no serious administrative burden regarding the making of payments to traders because it would be left to individual companies to make their claims and that would virtually be the end of the problem. The hon. Gentleman suggested it would be almost a self-policing operation. I assure him and the House that if the amendment were allowed to stand the operation would be formidable, even if no further complications were to ensue from subsequent appeals, which I do not rule out, to divisional and higher courts.
The majority of traders have already been accounting for tax—I want to make that clear to the House—in accordance with the original intention. It is likely that if the matter is left on its present basis a large number of claims for repayment will be involved. The formulation of the claims for the traders would not be a simple matter. It would mean calculating the tax on each charge made between 1st April 1973 and the date of Royal Assent to the current Finance Bill under hiring contracts in which the goods had been delivered before the date of Royal Assent to the Finance Act 1972.
Hon. Gentlemen may look mystified. Therefore, it is only right that I should repeat that precisely to the House so that

it is clear. It would mean calculating the tax on each charge made between 1st April 1973 and the date of Royal Assent to the current Finance Bill under hiring contracts in which the goods had been delivered before the date of Royal Assent to the Finance Act 1972.
That would be a burden in the first place not on Her Majesty's Customs and Excise but on the individual traders who were seeking to make claims under the provisions of the clause as amended. There would be additional transitional problems in determining the tax payable on supplies which span the date of the Royal Assent to the current Finance Bill.
In view of the large amounts of revenue involved—I have already suggested a minimum of £50 million and it could be considerably more—the Customs and Excise—I am sure that I carry hon. Gentlemen with me on this at least—could not be expected to accept traders' claims without official verification. It would be the height of irresponsibility if it were to do so.
The verification of individual claims would be far from straightforward. Individual transactions between claimants and their customers would need to be verified to ascertain whether the supplies were made to business customers entitled to deduct input tax. It would also be necessary to confirm that business customers who had been credited with a tax charged to them had properly adjusted their deductions of input tax. The dates of original supply agreements and installations would have to be checked, and also the dates when payments would be made. It would be nothing short of a nightmarish situation.
I have indicated that in some cases there would be a substantial problem about passing on repayments effectively to those people, the customers of taxable suppliers, who have borne the burden of the tax.
I understand that the television rental companies in general did not increase their charges to their customers in 1973–74 on account of value added tax. I would judge that their reason for not doing so was not that they all along took the view taken by the London Value Added Tax Tribunal, but rather that the value added tax on television rentals was a much reduced charge by reason of the concession given in Section 48 of the 1972 Act


and that the rental companies felt that they had sound commercial reasons for refraining from passing it on at that time.
Even so, they have in most cases been paying amounts of value added tax to the Exchequer, and I think it likely that it will be open to their customers to argue that the charges were that much higher than they would have been if there had been no value added tax and that refunds should, in effect, be made to the end customers as well.
Where charges have been increased since April 1973 on account of value added tax, the customer unquestionably has a moral claim and may have a sound legal claim—this would remain to be settled in the courts—for a refund from the supplier. Some contracts may have terminated. Customers may be difficult to trace. Therefore, I very much doubt whether repayments could or would be effectively passed on to all customers. If they were not, they would constitute a clear bounty to the suppliers.
That apart, there are the administrative problems for the small supplier confronted with a procession of aggrieved customers who learn of the proceedings in Standing Committee and are under the impression that, if the decisions there were not reversed, they would be entitled to a refund of their value added tax on hirings covering this period. The fall-out for the individual suppliers in having to deal with disgruntled customers and process their claims, if they threatened action or became legally entitled to repayment of value added tax, would be enormous.
As I said in Standing Committee, this is not at all a happy situation. Its origins are not of this Government's making. I make no criticism of Conservative Members as to the drafting of the 1972 Act, because my hon. Friends and I accepted the intention of the Bill. We are seeking merely to restore the intended effect of the 1972 Act. We are not seeking any element of retrospection in the sense that we are legislating afresh by removing an ambiguity in the legislation. We understand all the arguments against the principle of retrospective legislation. I have used them myself more than once.
We must consider not only the abstract principle but the practicalities of the situation, which potentially affect thousands of businesses and millions of custo-

mers. The Standing Committee is asking the House to accept an administrative monstrosity with the clause as unamended. For the reasons I have given, I hope that the House will accept the amendment.

Mr. R. Carr: To what sectors of industry, individual companies, trade associations and so on has the Customs and Excise explained all the difficulties and complexities? I have not received a single representation from industry that it is in any way aware of them or that it supports the hon. Gentleman's view that industry would like this retrospective element to go forward.

Dr. Gilbert: I cannot tell the right hon. Gentleman to what extent representations have been made to industry by Customs and Excise. We have not solicited support for our view. The representations to us from the Equipment Leasing Association, an extremely responsible body of companies, were completely unsolicited. The association asked us to restore the position as it was intended to be under the 1972 Act.

Mr. Redmond: Would not it be worth mentioning the Radio and Television Retailers Association, which made representations to the hon. Gentleman?

Dr. Gilbert: I am happy to discuss the meeting I had with that association. Its concern was not with the clause but with the relief under the two-thirds/one-third arrangement, which it considered inadequate. I will not embarrass the hon Gentleman or the hon. Member for Worthing by discussing its comments on the precise form of the 1972 legislation. The thrust of the association's complaint was that the one-third relief would run out at the end of this year, and it was seeking an extension. Its complaint was in no way addressed to the clause.

Orders of the Day — TRADE UNION AND LABOUR RELATIONS BILL

Order for Third Reading read

9.45 p.m.

Mr. Speaker: I must interrupt the proceedings on the Finance Bill, with regard to the matter of privilege which arose earlier today.
I have to inform the House that, following the order made earlier regarding proceedings on the Trade Union and Labour Relations Bill, the Bill has been returned by the Lords and that Clause 27 and Schedule I have been corrected by the insertion of Amendments Nos. 101 and 66.
Pursuant to the order of the House this day, it now falls to me to put the Question, That the Bill be now read the Third time.

Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.

Bill accordingly read the Third time and passed.

Ordered,
That the Bill, as corrected in this House, be returned to the Lords.

Orders of the Day — FINANCE BILL

As amended (in the Committee and the Standing Committee), again considered.

9.46 p.m.

Mr. Peter Rees: As the Financial Secretary said in Committee, the privilege fell to me to move the amendment which struck out the retrospective element in what was then Clause 4 and is now Clause 5.
On that occasion, the Financial Secretary resisted the amendment in temporate terms, and his case was very much that which he has made today. It is obvious that in the intervening month he has sought comfort and counsel from his Department. As a result, we have had a speech from him highly charged in content, which I suggest has been both insensitive and arrogant. In particular—this characterises his approach to this question—he made an extremely partial and selective quotation from the Treasury handout on the clause. Since it throws a flood of light on the approach of his Department and on his own approach to the clause, I hope that I shall be forgiven if I read the whole passage.
It is as follows:
A Ways and Means Resolution has been introduced to authorise legislation in the forthcoming Finance Bill which will restate the intention of Section 7(8) of the Finance Act 1972, concerning the application of value added tax to 'continuing supplies' such as hirings

and rentals. The effect is to correct uncertainty created by a recent decision of the London Value Added Tax Tribunal concerning television rentals …
It was at that point that the Financial Secretary's quotation ceased. I intend to read on, because what follows is extremely revealing about his approach to this problem:
… and to confirm that tax has been properly chargeable on hiring and rental charges from 1st April 1973 onwards irrespective of the date when the hiring or rental agreement began.
According to that statement, the London Value Added Tax Tribunal has held clearly and unequivocably that no tax has been properly charged to date. In view of that, it would have been better if the Financial Secretary had cited the whole passage so that the House could judge how his administration have approached this problem.
In essence, the case which the hon. Gentleman has deployed today, although in more highly charged terms, is the same case that he deployed in Committee. He rests his case, first, on the amount involved.
Before the proceedings in Committee, I put down a Question to the Chancellor of the Exchequer asking how much tax was involved. Unfortunately, I had not received my answer by the time that this clause was debated in Committee. However, by the courtesy of the Financial Secretary, I was given the gist of the answer, which was that it was impossible to calculate how much tax was involved.
Apparently, between 17th June and 16th July—so great are the resources of the Customs and Excise—between £50 million and £100 million of tax is involved. I do not mind how much tax is involved. But if we are to test the arguments of the Financial Secretary, at least there is cause to stop and think why, if he was so uncertain on 17th June, he is so confident on 16th July.
The hon. Gentleman's second argument is that old-age argument of all administrations—but the point we are here debating is not a partisan one. It does not lie between the Liberal and Conservative Parties or the Labour and Conservative Parties; it lies, on the whole, between those who believe that in any given situation the Executive must be protected from the consequences of its own ill thought-out legislation and those who believe that at the end of the day


the convenience of the taxpayer or the subject is paramount. In that I know exactly where my allegiance lies.
If it is a question of inconvenience, we have to balance the inconvenience to the Customs and Excise, who may, if this amendment is rejected and if the decision of the London Value Added Tax Tribunal is confirmed on appeal, be met with a certain number of inconvenient reclaims of tax improperly deducted and accounted to Customs and Excise. I recognise the difficulties and I know that a Department finds it particularly irksome to have to admit that on occasion it has been wrong, but it is a common experience of all great Departments of State that, on occasion, the courts will find that they have been incorrectly administering the law that we have passed in Parliament. This is an experience, particularly in the complex field of VAT, to which they must reconcile themselves sooner rather than later.
I say that that inconvenience does not balance against the inconvenience of those companies which have not charged tax to their suppliers and which, if this amendment is carried, would never be able to recover tax for periods past and gone. If it is a question of balancing the hardship and inconvenience of those two groups of people, again I know where my allegiance and support lies. It is to those who have not—as the courts have so far held, quite properly—charged and accounted for VAT on hirings and supplies derived from contracts entered into before the 1972 Finance Act. Now the Financial Secretary has almost put it that this amendment is designed to protect retailers who are involved in this mesh of provisions.
The hon. Gentleman conveniently omitted to remind the House or point out to it, as my hon. and right hon. Friends have, that there is a responsible body of opinion in the trades concerned which was enormously relieved that Clause 4 was amended in Committee. The Radio and Television Retailers Association has been mentioned. There is a representative of that association in the Gallery, and I am sure that if the rules of order permitted he would confirm everything that I am saying. That association quite spontaneously came to me and said that it was enormously gratified by the amendment carried in Standing

Committe. We have not heard from the Financial Secretary about the representations it made to him, and we have not heard of any of the very substantial bodies which have been lobbying in support of the amendment.
Leaving aside questions of inconvenience—which, at the end of the day, if deep principles are involved, I suggest must count as nothing—let us look at the principles involved. The Financial Secretary is asking us to enact a piece of retrospective legislation. In our debates retrospectivity has become a kind of talisman, but the point can be overplayed. Indeed, when it came to granting relief to those who have improved their fire protection I was very glad, and admitted that the measure introduced was retrospective, because it is always right retrospectively to relieve the subject of burdens. But I believe, equally, that it is quite wrong to impose burdens retrospectively. I believe that any taxpayer, or any subject, is entitled to order his affairs on the basis of the law then prevailing and, so far, the courts of this country, in dealing with legislation between television companies and Customs and Excise, have held emphatically that those who did not charge VAT on supplies and hiring agreements deriving from before the introduction of VAT were quite proper in not having done so, and were taking a correct view of the law.
The Financial Secretary's argument really boils down to a matter of inconvenience—that, notwithstanding that they have quite properly ordered their own and their customers' affairs on a certain basis, we now wish them to re-order their affairs and to charge them tax which they will never be able to recover from their customers. I find that a particularly unattractive position for any administration to take up. The hon. Gentleman attempts to put the convenience of his own Department above the convenience of individual taxpayers. Again I find that an unattractive position for any serious-minded Minister to adopt.

Dr. Gilbert: I have never at any time suggested that the interests of the Customs and Excise came above those of individual taxpayers; I was merely saying that they were joined together, and that all would be suffering seriously from this.

Mr. Rees: I find that the most extraordinary and specious argument. If the Financial Secretary can convince the House that on this occasion the interests of Customs and Excise and those companies which have quite properly not charged VAT to their customers are identical, he is capable of sophisticated argument of a kind that quite passes over my head, and, I suspect, will pass over the heads of most of my right hon. and hon. Friends. This must be left to the House to judge.
The hon. Gentleman passed over, with considerable smoothness and speed, the fact that the amendment would have the effect of annulling a decision which litigants have so far obtained in their favour from the VAT tribunals. The precedents for this course of action are few, I am happy to say, and entirely dishonourable. The only one which I can readily recall is that of Burmah Oil Corporation, and I do not feel that that lends substantial support to the case which the Financial Secretary is seeking to deploy.
I can well remember a blush passing over the features of Lord Elwyn-Jones, who was called on in debates in the previous Parliament to justify his own position on that case. I should like to hear at considerably greater length, and with considerably more eloquence than has so far been deployed, any good point of principle which should lead Parliament to override a decision of the courts that has been quite properly obtained.
The proper and honourable course for Customs and Excise in this case, if, as it states in its Press handout, uncertainty is being created and it wishes to confirm that tax has been properly charged, is to take the matter to appeal. The improper way is to say, in this House, "We wish to override the decision of the courts." In this amendment considerable points of principle are at stake.
It may be a small amendment in a narrow compass, but involved in it is the role of the courts, the position of the Executive and the rights of the subject. I hope that I shall not be guilty of undue rhetoric if I say that, speaking for myself and—I hope—for most of my right hon. and hon. Friends, we are elected to this House to preserve the position of the courts, to make certain that the Executive does not become overweening and,

arrogant, and, above all, to protect our constituents from the power of the Executive when it is improperly exercised.
The London VAT Tribunal has held that in this regard Customs and Excise has not behaved in accordance with the law. The proper and honourable course is for this House and this administration to abide by that decision. I hope that the amendment will be contemptuously rejected.

10.0 p.m.

Mr. Geoffrey Dodsworth: In proposing this amendment the Financial Secretary made a reference to the Equipment Leasing Association in which I should declare an interest since I am a vice-chairman of the association.
It might be helpful if I were to recount briefly the conversation I had with one of the officials of that organisation late yesterday. I understood then that there had been discussions between the officers and representatives of the Treasury on this point and the view had been expressed by the association that the position which appertained before the VAT tribunal was the one being operated effectively in the industry. It was a procedure which had been arrived at after consultation at the time of the 1972 measure and was, therefore, acceptable to the industry as a whole.
When this change in the proposed legislation was made known it was felt that there was doubt and uncertainty. To see yet further doubt and uncertainty was a source of great concern to those in the narrow area affected by this Bill. That was the view of the officials of the association. They were concerned, however, that their view should not be expressed in any way on their behalf without proper consultation with the officers of their association. I understand that the matter was discussed by the management committee of the organisation this morning and their authority and permission were given to say that they felt that the changes proposed in Standing Committee were not in the best interests of that association. It is right that I should say so this evening.
It seems strange, even though that be the case, that we have had a tribunal which has brought about an effect which was not in accord with everybody's


understanding of the Bill as originally presented. When the understanding arrived at was not the law, it does not seem very satisfactory that we do not follow the course of the law. If there is a proper procedure and method to establish the true intention of the original Act, then that course should be followed. In those circumstances I should be very happy to support that part of the views expressed by my hon. and learned Friend.

Mr. Pardoe: The Financial Secretary addressed some of his comments to me, particularly those about the difficulties of administration involved in setting this matter right, partly as a result of my comments made on this passage during the Committee Stage. I am deeply sorry to see that the Government have brought forward this amendment. We have debated it very fully in Committee and today. Alas, retrospective legislation is before us again. We have to consider the matter afresh tonight.
The facts of the matter are clear. Parliament and Government have made a mistake. There is no point in trying to allocate the blame for that. It is bound to happen from time to time. It has been caught out by the courts.
The question which we have to decide is simple. Do we accept the verdict of the court and the tribunal or do we use our privileged position and power to change the past? Those who are familiar with the arguments of mediaeval theologians know that a lot of argument took place whether God could change the past at that time in history. The question was never satisfactorily settled one way or the other.
I cannot vote to put this House in a position which I do not believe God occupies. We cannot change the past and we should not endeavour to do so. Therefore I stick fast to the general principle on retrospective legislation which I enunciated during the Committee Stage. I do not believe that we should set any more precedents to go alongside that of Burmah Oil. If we accept this amendment, that will provide one more argument which others can bring forward in future debates when this question again arises.
The second argument concerns the question of cost. I accept that whether the sum amounts to £50 million or £100

million it is a considerable amount of money. It is money which could well be put to very good effect elsewhere in our society and indeed in the public sector. But this is the price of the mistake made by Parliament and Government. Other people have to pay when they fall foul of the courts. I see no reason why Government and Parliament should not have to pay.
The Financial Secretary addressed his remarks on the question of administration very closely to me. I admit that there will be an enormous number of problems. I never denied that. He spelt out clearly the detail of those claims and what would be involved, with every transaction having to be recalculated. At the Committee Stage I said—I think he accepted it—that the claims will in the first instance have to be made by the traders. He said that Customs and Excise will have to check those claims. But surely Customs and Excise will not have to check every one of those claims.
It is normal practice, I know, to check a certain proportion of the claims—not 100 per cent., but 10 or 15 or 20 per cent., whatever it is. If the Financial Secretary can assure me that there is some magical reason why in this case every claim will have to be gone through, calculated and recalculated by civil servants, his argument begins to stand up. But it is not true that this would have to happen.
If these administrative difficulties are as great as the hon. Gentleman says they are—and I accept that they are great—and are insuperable, as he seems to imply, I would have thought that the industry would have concluded that it could not work them either. It has not done so. Many of us have had letters from the Radio and Television Retailers' Association welcoming the decision of the Committee and not casting any doubt on the trade's ability to go through this administrative process.
I remain totally unconvinced that the House should set aside in this way the decision of the court, and I intend to oppose again tonight the whole principle and extension of retrospective legislation

Mr. John Cope: I find the amendment constitutionally highly objectionable. I want to draw attention to two consequences which would flow from it. First, no one


would be able to know in future precisely what the tax law was because everyone would have to bear in mind the argument used by the Government today for the amendment—that the intention of Parliament at the time of passing the law was paramount even if the law has subsequently turned out to mean something else.
Taxpayers and their advisers should not have to look back at HANSARD in order to find out the intention of the House at the time it passed a law in case that argument were to be used to change that law in the future. When playing family croquet, it is an acceptable ploy to try to bend the rules in one's own direction in order to get an advantage, but it should not be open to Governments to say, "We wrote the rules wrongly and now want to change them retrospectively".
The second consequence is that it would scarcely be worth while for people to take the Government to court in order to decide a particular point in tax law because they would know that what had been done in this case could be done again. They would know that if the Government lost, even in a lower court, they could come to the House and say, "We did not mean this and therefore we must overrule the court and change the position", even before there was time for the taxpayer to appeal to a higher court.
The hon. Gentleman made a great deal of the delay which might be involved if the case had to work its way up through the courts on the insistence of either side. But the slowness of the courts or the uncertainty of the law, referred to in the Press release read by my hon. and learned Friend the Member for Dover and Deal (Mr. Rees), are not arguments which should weigh with us in judging this constitutional issue.
The question is, was the tax legally paid or not? If the tribunal was right, then the last Parliament itself created the administrative problems and difficulties and, possibly, the expense to which the hon. Gentleman referred. If, on the other hand, the tribunal was wrong in its decision, that is a matter not for us but for the higher court to which appeal is still open and to which, we are told, the Customs and Excise would appeal if this amendment were rejected.
These two consequences alone should persuade us of the constitutional reasons for rejecting the amendment. No one will again be able to know the tax law with certainty without referring to Parliament's intentions and no one will feel confident about going to the courts against the Government in case they lost and then changed the rules in their own favour. I shall therefore do my best to ensure that the amendment is not accepted.

Mr. Carr: The House should recognise that we are dealing with a serious case but also an important principle. This is one of the occasions when the House was to consider the expediency of the matter, in the full sense of the word, involving considerable sums, considerable work and inconvenience for the Customs and Excise as well as for industries and many organisations and private people. As the Financial Secretary said, it is difficult to unscramble this egg.
Against that inconvenience there is the great point of principle. When the House introduced value added tax we set up special value added tax tribunals to deal with questions of this kind. There is no doubt about the clarity of our intention, but taxpayers took advantage of the machinery for judging disputes. These cases came before the London Value Added Tax Appeal Tribunal, with the result we know.
The Government's proposal is offensive to me. The Financial Secretary did not make himself clear in Committee, but I got the impression that although a formal notice of appeal had been lodged there had been no determined effort to pursue it. Therefore, because the case went against them in the tribunal—the first court—without going to the appeal provided for by Parliament the Government are making a retrospective effort to upset that decision.
There are serious consequences to the lack of clarity in the Act. I suppose that Parliament must take some responsibility for that, but so must my party as the Government of the day. Nevertheless, however we look at it, we come back to the awkward principle that Parliament passed the law and set up a special tribunal as the proper remedy for grievance and uncertainty. When taxpayers use that procedure and win against the Executive, without testing the matter


any further the Government propose to reverse the decision.
10.15 p.m.
I am afraid that on balance—I say "I am afraid" because I realise the serious consequences, and repeat that—when faced with this situation Parliament ought to have no option but to stand by the rule of law in this matter. I do not want to make light complaint, but I wish that the Financial Secretary had gone as fully into the matter in Committee as he has this evening. I have just been reading what he said in Committee. A number of things might then have happened which might—I do not think that they "would"—have changed my view. Whether they would have changed the view of other hon. Members I cannot say. For example, regarding the amount of money, the Financial Secretary spoke about tens of millions of pounds in Committee, and that was all that he had to say. This evening he quantified it as £50 million to begin with, but then gave a number of other consequential effects. It looked as though it might be a very much higher amount.
From my shadow position I can only say that had I felt that it was, perhaps, this much larger sum of money than he had indicated, I would have taken special measures to see some of the people involved outside this House, in the industries and among the circles involved, and investigated it personally much more closely than I have done. Second, had the Financial Secretary told the Committee that many people in the trades affected wished the matter to be left as it was, again I would have made inquiries. But I have to repeat formally to the House what I said in an intervention just before the Financial Secretary ended his speech. Whereas I have had many representations made to me against the retrospective nature of the original Clause 4—Clause 5 as it is in the amended Bill—I have not received a single representation from anyone supporting what the Financial Secretary said, namely, that many people were asking the Treasury to leave it as it is.
I have now noted that my hon. Friend the Member for Hertfordshire, South-West (Mr. Dodsworth), declaring his position as Deputy Chairman of the Equipment leasing Association, confirms what

the Financial Secretary says. I was expecting him to confirm it. I am sure that the Financial Secretary would tell us only what was true in this matter. He told us how he had spoken to some officials of the association and then, I gather as recently as this morning, the elected officers of the association met him about the matter.
It is several weeks since this matter was dealt with in Standing Committee. One would have thought that if the Government wanted to argue that the Standing Committee decision should be reversed because people outside the House want to reverse it, they would have gone to them and discussed it with them in time for associations such as that of which my hon. Friend is deputy chairman to consider it properly, and not just to have a meeting with the officers on the morning of the day on which we are considering it. They should have given the association a proper chance to talk to the Opposition and to back benchers. I have had not a single representation from outside the House wishing the Opposition and the House generally to do what the Government are now asking them to do. Without exception, all the weight of opinion that I have received from outside the House is begging us to support the amendment passed in Standing Committee.

Dr. Gilbert: I do not seek to interrupt the flow of the right hon. Gentleman's argument. The meeting that was held very recently was not concerned with the substance of the case. That had been the subject of representations to us previously by the association. The meeting this morning was to clear, among the officials of the association, the question whether I was at liberty to use their name.

Mr. Carr: It is clear that the view expressed by the association has not gone through all the channels of the association in great detail.
We come back to the point of principle. The only thing that could have diverted us from the point of principle was evidence that many citizens, either individual or corporate, affected by this legislation had come to Parliament and said, "On balance we would rather it was left as it was, and we accept this retrospectively." But that has not been


the case. I repeat that I have not had a single representation to that effect.
I realise the great practical difficulty, but Parliament must maintain the position that in this case the rule of law must prevail.

The Chancellor of the Exchequer (Mr. Denis Healey): I wish to address my remarks to the right hon. Member for Carshalton (Mr. Carr), who has just addressed the House with a great deal of moderation, and some caution, as well he might in the light of the information he now has. The right hon. Gentleman has asserted several times recently his belief that he may before long be holding the responsibility which I at present hold, and I ask him to reflect carefully on the implications of the course he is advising his right hon. and hon. Friends to follow.
The amendment formally establishes the position which until a few months ago the whole House believed to have existed since 1972. That position was initially established and put to the House by the then Conservative Government, who persuaded the House that it was right that VAT should apply to all hirings as from 1st April, 1973, although they accepted some concessions pressed upon them by the then Labour Opposition. The right hon. Gentleman proposes tonight to lead his Party into the Lobby against a decision taken by the Conservative Government when it was last in power. It is not the first occasion in the discussions on this Bill that he has done so.
When we were discussing the question of the trade unions' provident funds he accepted that the measure we wished to introduce sought to restore the position as he had claimed that it should be when he was in office. He also accepted during that debate that in principle he believed that retrospective legislation was justified. The right hon. Gentleman argued then, as he has argued tonight, that because of the way in which the matter has been handled, in that case by the trade unions and in this case by the Government, he is not prepared to recommend his right hon. and hon. Friends to restore a position which he himself supported when in Government—

Mr. Carr: The right hon. Gentleman must not misrepresent me in this serious and fundamental way. The case I made about the trade unions was that in exceptional circumstances Parliament is justified in passing retrospective legislation to relieve citizens of a burden imposed upon them in a way which Parliament did not intend, and from which citizens could not relieve themselves. In this case the matter is entirely the other way around. We are relieving citizens from a burden which the Government are trying to impose retrospectively. If we believe in the rule of law, then we believe in the rule of law.
No doubt we must criticise ourselves if the drafting of a law was evidently not sufficiently perfect, yet it is clear here that the Executive are asking Parliament to reverse that law without even having gone through the proper processes of appeal laid down by Parliament.

Mr. Healey: I do not want any unnecessary argument with the right hon. Gentleman. I accept the distinction that he regards as important—and there is an important distinction between retrospective legislation which is intended to relieve the citizen of a burden and retrospective legislation which has the opposite effect. But the point concerns the principle of retrospective legislation in circumstances which he then accepted, but which he would claim do not exist in the situation in which the House finds itself tonight. I fully accept that.
I come to the second point, which is that not to accept the Government's amendment tonight—and I suspect from the way in which the right hon. Gentleman spoke just now that he accepts this fact—would involve appalling administrative difficulties. I think that he accepts this evidence given by my hon. Friend the Financial Secretary and confirmed by the hon. Member for Hertfordshire, South-West (Mr. Dodsworth) in an impressive speech, that part of industry—I do not claim all of it—would find it troublesome and unwelcome to attempt to unscramble eggs which have been scrambled over the last 18 months.
I am glad that the right hon. Gentleman gave this aspect of the matter its due importance tonight, but he decided, on balance, that what he called respect


for the law should override this consideration. However, I come now to a far more important point. I ask the right hon. Gentleman as pretender to my throne to consider it seriously, and I ask his hon. Friends to do the same. To refuse assent to the amendment would involve increasing the public sector borrowing requirement by up to £120 million. Opposition amendments which have been carried this afternoon would raise this sum to £200 million. New Clause 14 and Amendment No. 101 would cost £15 million and £13 million respectively. Amendment No. 120 on the investment income surcharge would cost £40 million. This is an important aspect of the matter. Later we shall be debating Amendment No. 116 on the payment of advance corporation tax, and the passing of that amendment in itself would cost £300 million and would raise the total increase in the public sector borrowing requirement by £500 million.
I and my right hon. Friends understood that when the right hon. Gentleman and the Leader of Opposition addressed themselves to the Bill they would not press any amendments which would have the effect of calling into question the Budget judgment and which would seriously unbalance the relationship between revenue and expenditure on which I based the Budget judgment four months ago. The right hon. Gentleman may be right to change his view on that. I might myself decide to change my view in the next week or so, but if I do so decide I shall tell the House frankly the magnitude of the change which I think is required and the nature of the expenditures which it is most appropriate to make in order to effect this change.
I asked the right hon. Gentleman at Question Time last Thursday whether he would like to give us his view about whether more reflation was needed. His hon. Friends were not backward in putting their views forward. I cannot claim that I counted every intervention, but my impression was that at least a dozen Conservative Members declared themselves strongly opposed to any increase in the public sector borrowing requirement at this time, yet many of them voted for such increases this afternoon.
If the right hon. Gentleman presses his oppositon to the Government's amendment tonight and continues to vote for

the other amendments which stand in his name and those of his hon. Friends, he will be saying not only that he favours reflating the economy by £500 million; he will be saying—

10.30 p.m.

Mr. Carr: The right hon. Gentleman should not go on talking about £500 million. Of course, he can talk about what he likes but he cannot talk about what we are doing when we have not done it. First, as he knows quite well, the largest sum which he is talking about involves the timing of cash flow. That is a different matter. The two amendments which have been passed today do not total anything like the sum which he has mentioned unless we have been given the wrong information by the Government.

Mr. Healey: The right hon. Gentleman is shouting before he is hurt. We shall be interested to pursue this aspect of the argument later. It may be that the right hon. Gentleman does not intend to press some of the more important amendments which he has tabled, but he has pressed his amendments so far, and those which he has pressed today have cost some £15 million. We have not yet taken the amendment relating to small company taxation—

Mr. Carr: rose—

Mr. Healey: If the right hon. Gentleman wishes I shall repeat the figures. The position which he is asking his hon. Friends to take will add £120 million to the public sector borrowing requirement.

Mr. Carr: If the right hon. Gentleman now says that it will cost £120 million, why did not the Financial Secretary tell the Standing Committee that a month ago?

Mr. Pardoe: Tens of millions.

Mr. Healey: Let me give the right hon. Gentleman, who I presume is interested—[HON. MEMBERS: "Answer"] I presume that the right hon. Gentleman is interested to hear the figures. I hope that some of his hon. Friends are, too. I shall give the make-up of the £120 million. If we take services first, there will be £54 million on telephone rentals, £10 million on continuous services other than telephones, £10 million on television


rentals, £10 million on the hire of motor vehicles, £5 million on the hire of computers and office equipment, £5 million on equipment leasing, £1 million on the hire of refrigerators and so on, with some 25 per cent. to be added in the period 1st April to Royal Assent. Those are important figures.
If the amendment and if other amendments are pressed to the vote, or if the Opposition's intentions are pressed to the vote, the right hon. Gentleman will not only be adding £500 million to the public sector borrowing requirement but will be ensuring that £300 million of advance corporation tax falls out of the current financial year, thus increasing the public sector borrowing requirement in the year covered by the Bill.

Mr. William Clark: rose—

Mr. Healey: Let me pass on. We shall have more time if hon. Members wish to pursue the matter. The right hon. Gentleman will not only be saying that he and his right hon. Friends believe in a reflation of £500 million, they will be saying that the additional demand should go exclusively to football pools, to persons who have paid tax according to the intentions of his own Government, to the property speculators and to small and large companies. He has a perfect right to say so if he wishes. He has every right, and so have his hon. Friends, to fight the General Election on that programme.

Mr. Carr: rose—

Mr. John Tomlinson: Sit down and shut up.

Mr. Carr: The right hon. Gentleman is now mentioning the property speculators and football pools. He is allowing his imagination to become even more vivid than usual.

Mr. Healey: The right hon. Gentleman has put down and carried an amendment on development gains, and that involves moneys made out of property speculation. Nobody made that clearer than did his predecessor—

Mr. William Clark: rose—

Mr. Healey: —the right hon. Member for Altrincham and Sale (Mr. Barber)—

Mr. Deputy Speaker (Mr. Oscar Murton): Order. If the right hon. Gentleman is not prepared to give way he must not be pressed.

Mr. Healey: If the right hon. Gentleman continues to vote along these lines, millions of his supporters in the country will see his behaviour as political opportunism and as representing a fiscal irresponsibility which would indeed make him a worthy successor to the previous Conservative Chancellor—the exponent of a type of profligacy which was rightly stigmatised only yesterday by an eminent group of Conservative economists.
I want to address myself to the hon. Member for Croydon, South (Mr. Clark) who wishes to intervene. He and his hon. Friends have expressed themselves firmly in recent weeks against any reflation in the economy and against any increase in the public sector borrowing requirements. They did so only last week at Question Time. As they did so, the right hon. Member for Carshalton sat down. He gave no opinion of his own on the question, but he has given it tonight. He believes that it would be proper at this time to increase the public sector borrowing requirement in this way. I ask the right hon. Gentleman to reflect most carefully on the points which I have put to him. If he does so, he will recognise that to press his intention to a vote in the Lobby will be to seal the doom of his party at the polls.

Mr. Clark: Before the right hon. Gentleman sits down—

Mr. Deputy Speaker: Order.

Mr. Clark: Perhaps I misunderstood the right hon. Gentleman, but I was clearly under the impression that he said he would give way to me. The Chancellor got the increased public sector borrowing requirement up to £500 million on the assumption that all the amendments which are still to be debated would be passed by the House. If the Chancellor is so keen to keep down the borrowing requirement, why did he and his party allow a Government amendment to be defeated by 25 votes? Is it Government policy to allow all Opposition amendments to be passed? The logic of the Chancellor's argument that there will be an increase of £500 million in the public sector borrowing requirement is that the


Government will not resist any other amendment.

Mr. Healey: The hon. Gentleman's arithmetic is disappointing for a man who has some pretensions to a knowledge of economics. He must be aware that the overall majority of opposition parties is 33. We have said many times that if the opposition parties collectively wished to behave irresponsibly they could defeat the Government at any time they wished to do so. I assume from the way in which opposition parties have behaved in recent weeks and from the amendments which they have pressed today that they

have put down amendments with the intention of carrying them.

I have demonstrated—I believe to the satisfaction of the House—the consequence of carrying these amendments, and I ask the right hon. Member for Carshalton, who still maintains pretensions to exercise Government responsibility at a time of national economic crisis, to reflect on the profligacy to which he may condemn the country if he presses the amendment to a vote.

Question put, That the amendment be made:—

The House divided: Ayes 280, Noes 298.

Mellish, Rt. Hn. Robert
Robertson, John (Paisley)
Thorne, Stan (Preston, S.)


Mendelson, John
Roderick, Caerwyn E.
Tierney, Sydney


Millan, Bruce
Rodgers, George (Chorley)
Tinn, James


Miller, Dr. M. S. (E. Kilbride)
Rodgers, William (Teesside, St'ckton)
Tomlinson, John


Mitchell, R. C. (S'hampton. Itchen)
Rooker, J. W.
Tomney, Frank


Molloy, William
Roper, John
Torney, Tom


Moonman, Eric
Rose, Paul B.
Tuck, Raphael


Morris, Alfred (Wythenshawe)
Ross, Rt. Hn. William (Kilmarnock)
Urwin, T. W.


Morris, Charles R. (Openshaw)
Rowlands, Edward
Varley, Rt. Hn. Eric G.


Morris, Rt. Hn. John (Aberavon)
Sandelson, Neville
Wainwright, Edwin (Dearne Valley)


Moyle, Roland
Sedgemore. Bryan
Walden, Brian (B'm'ham, Ladywood)


Murray, Ronald King
Selby, Harry
Walker, Harold (Doncaster)


Newens, Stanley (Harlow)
Shaw, Arnold (Redbridge, Ilford, S.)
Walker, Terry (Kingswood)


Oakes, Gordon
Sheldon, Robert (Ashton-under-Lyne)
Watkins, David


Ogden, Eric
Shore, Rt. Hn. Peter (S'pney &amp; P'plar)
Weitzman, David


O'Halloran, Michael
Short, Mrs. Renée (W'hamp'n, N.E.)
Wellbeloved, James


O'Malley, Brian
Silkin, Rt. Hn. John (L'sham, D'ford)
White, James


Orbach, Maurice
Silkin, Rt. Hn. S.C.(S'hwark, Dulwich)
Whitehead, Phillip


Ovenden, John
Sillars, James
Whitlock, William


Owen, Dr. David
Silverman, Julius
Willey, Rt. Hn. Frederick


Padley, Walter
Skinner, Dennis
Williams, Alan (Swansea, W.)


Palmer, Arthur
Small, William
Williams, Alan Lee (Hvrng, Hchurch)


Park, George (Coventry, N.E.)
Smith, John (Lanarkshire, N.)
Williams, Rt. Hn. Shirley (H'f'd &amp; St'ge)


Parker, John (Dagenham)
Snape, Peter
Williams, W. T. (Warrington)


Parry, Robert
Spearing, Nigel
Wilson, Alexander (Hamilton)


Pavitt, Laurie
Spriggs, Leslie
Wilson, Rt. Hn. Harold (Huyton)


Pendry, Tom
Stallard, A. W.
Wilson, William (Coventry, S.E.)


Perry, Ernest G.
Stewart, Rt. Hn. Michael (Fulham)
Wise, Mrs. Audrey


Phipps, Dr. Colin
Stoddart, David (Swindon)
Woodall, Alec


Prentice, Rt. Hn. Reg.
Stonehouse, Rt. Hn. John
Woof, Robert


Prescott, John
Stott, Roger
Wrigglesworth, Ian


Price, Christopher (Lewisham, W.)
Strang, Gavin
Young, David (Bolton, E.)


Price, William (Rugby)
Strauss, Rt. Hn. G. R.



Radice, Giles
Summerskill, Rt. Hn. Shirley
TELLERS FOR THE AYES:


Richardson, Miss Jo
Swain, Thomas
Mr. John Golding and


Roberts, Albert (Normanton)
Taverne, Dick
Mr. Thomas Cox.


Roberts, Gwilym (Cannock)
Thomas, Jeffrey (Abertillery)





NOES


Adley, Robert
Clark, William (Croydon, S.)
Galbraith, Hn. T. G. D.


Aitkon, Jonathan
Clarke, Kenneth (Rushcliffe)
Gardiner, George (Reigate &amp; Banstead)


Alison, Michael (Barkston Ash)
Clegg, Walter
Gardner, Edward (S. Fylde)


Allason, James (Hemel Hempstead)
Cockcroft, John
Gibson-Watt, Rt. Hn. David


Amery, Rt. Hn. Julian
Cooke, Robert (Bristol, W.)
Gilmour, Rt. Hn. Ian (Ch'sh' &amp; Amsh'm)


Ancram, M.
Cope, John
Gilmour, Sir John (Fife, E.)


Archer, Jeffrey
Cordle, John
Glyn, Dr. Alan


Atkins, Rt. Hn. Humphrey (Spelthorne)
Cormack, Patrick
Goodhart, Philip


Awdry, Daniel
Corrie, John
Goodhew, Victor


Balniel, Rt. Hn. Lord
Costain, A. P.
Goodlad, A.


Banks, Robert
Crouch, David
Gorst, John


Beith, A. J.
Crowder, F. P.
Gow, Ian (Eastbourne)


Bell, Ronald
Davies, Rt. John (Knutstord)
Gower, Sir Raymond (Barry)


Bennett, Sir Frederic (Torbay)
d'Avigdor-Goldsmid, Maj. -Gen. James
Grant, Anthony (Harrow, C.)


Bennett, Dr. Reginald (Fareham)
Dean, Paul (Somerset, N.)
Gray, Hamish


Benyon, W.
Deedes, Rt. Hn. W. F.
Grieve, Percy


Berry, Hon. Anthony
Dixon, Piers
Griffiths, Eldon (Bury St. Edmunds)


Brittan, Leon
Dodds-Parker, Sir Douglas
Grimond, Rt. Hn. J.


Biggs-Davison, John
Dodsworth, Geoffrey
Grist, Ian


Blaker, Peter
Douglas-Home, Rt. Hn. Sir Alec
Grylls, Michael


Boardman, Tom (Leicester, S.)
Drayson, Burnaby
Gurden, Harold


Body, Richard
du Cann, Rt. Hn. Edward
Hall, Sir John


Boscawen, Hon. Robert
Durant, Tony
Hall-Davies, A. G. F.


Bowden, Andrew (Brighton, Kemptown)
Dykes. Hugh
Hamilton, Michael (Salisbury)


Boyson, Dr. Rhodes (Brent, N.)
Eden, Rt. Hn. Sir John
Hampson, Dr. Keith


Braine, Sir Bernard
Edwards, Nicholas (Pembroke)
Hannam, John


Bray, Ronald
Elliott, Sir William
Harrison, Col. Sir Harwood (Eye)


Brittan, John
Emery, Peter
Harvie Anderson, Rt. Hn. Miss


Brocklebank-Fowler, Christopher
Ewing, Mrs. Winifred (Moray &amp; Nairn)
Hastings, Stephen


Brown, Sir Edward (Bath)
Eyre, Reginald
Havers, Sir Michael


Bruce-Gardyne, J.
Fairgrieve, Russell
Hayhoe, Barney


Bryan, Sir Paul
Farr, John
Heath, Rt. Hn. Edward


Buchanan-Smith, Alick
Fell, Anthony
Henderson, Douglas (Ab'rd'nsh're, E)


Buck, Antony
Fenner, Mrs. Peggy
Henderson, J.S.B. (Dunbartonshire, E.)


Budgen, Nick
Fidler, Michael
Heseltine, Michael


Bulmer, Esmond
Finsberg, Geoffrey
Higgins, Terence


Burden, F. A.
Fisher, Sir Nigel
Hill, James A.


Butler, Adam (Bosworth)
Fletcher, Alexander (Edinburgh, N.)
Holland, Philip


Carlisle, Mark
Fletcher-Cooke, Charles
Hooson, Emlyn


Carr, Rt. Hn. Robert
Fookes, Miss Janet
Howe, Rt. Hn. Sir Geoffrey (Surry, E)


Chalker, Mrs. Lynda
Fowler, Norman (Sutton C'field)
Howell, David (Guildford)


Channon, Paul
Fox, Marcus
Howell, Ralph (Norfolk, North)


Chataway, Rt. Hn. Christopher
Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
Howells, Geraint (Cardigan)


Churchill, W. S.
Freud, Clement
Hunt, John


Clark, A. K. M. (Plymouth, Sutton)
Fry, Peter
Hurd Douglas

Question accordingly negatived.

Clause 7

CHARGE OF INCOME TAX FOR 1974–75

Mr. Higgins: rose—

Mr. Pardoe: I beg to move Amendment No. 120, in page 4, leave out lines 9 to 17 and insert:
(B) in respect of so much of the investment income included in an individual's total income as exceeds £2,000, at the additional rate of 15 per cent.'

Mr. Deputy Speaker (Mr. Oscar Murton): With this amendment, we are to discuss the following:
No. 113, in line 10, leave out ' £1,000 ' and insert £2,000'.
No. 114, in line 11, leave out from of ' to end of line 12 and insert 15 per cent.
No. 206, to leave out lines 13 to 17.

Mr. Pardoe: I can understand the mistake of the hon. Member for Worthing (Mr. Higgins) in rising to move this amendment. He will have recognised the familiarity of it, because it is the amendment which he moved in Committee and which I supported.
The Chancellor, who is just leaving the Chamber, will be sorry to hear that this will cost a little money. But all the best things in life and in Parliament do. This is about investment income and whether the Government are right to bring down the relief for what some people would call small savers, but what I will content myself by calling those who are not big savers anyway. At the outset I ask why it is that we make these distinctions so that we may get clear in our minds why we differentiate between so-called investment income or savings income and so-called earned income.
Savings income can come from many different sources. [Interruption.] If the money comes from inherited wealth then I believe that to tax money deriving from that inherited wealth at an exceptional rate is probably reasonable. To a large extent in this amendment we are dealing with those whose income comes from their life-long savings. [Interruption.] It seems that it is better to deal with inherited wealth—

Mr. Deputy Speaker: Order. May I plead with the House for silence so that

the hon. Member may move his amendment.

Mr. Pardoe: I am grateful to you, Mr. Deputy Speaker. It seems that it is better to deal with the problem of inherited wealth through the reform of such things as the inheritance tax and the introduction of a wealth tax, which I believe the Government are eventually to introduce. If the savings income derives from capital which has been saved out of income, then these savings might have had some measure of income tax relief on the way as, for example, with income deriving from an insurance policy. The premiums would have had some tax relief.
If the savings from which the income derives come from, for instance, buying shares then they have come completely out of taxed income, with no tax relief at all. The income may come from so-called savings that are derived entirely from the effects of inflation. In that case I would not have thought that there was any reason to argue for a separate investment income surcharge. Most rates of interest these days are negative rates because of inflation. Unfortunately unearned income tax does not distinguish between real and money profits. I ask the Government to consider in their reply the effects of inflation on unearned income.
For instance, a man who lends £1,000 for a year at 10 per cent. should at the end of the year have £1,100. If no inflation was taking place his wealth would have increased by £100 and he could count this as part of his real income. If inflation of 5 per cent. is taking place the final nominal wealth at the end of the year is only £1,050. His real income is £50 not £100. The difference is the addition to his nominal wealth which is required to maintain its real value.
I would have thought that the Government would wish to redistribute income, perhaps as part of the price of the social contract. I hope that they wish to dis If we are in the business of redistribution we ought to be endeavouring to redistribute real income not money income. tribute real income and real wealth, not phoney income and phoney wealth.
It is not possible to sweep away the whole of the investment income surcharge


in one Budget. I hope that the Government will do so if they introduce a wealth tax. I hope that they will then abolish the investment income surcharge, capital gains tax and death duty and replace the lot with an efficient wealth tax on real wealth and not inflationary wealth. This is certainly not the time for the Government to bring down the level above which a special small income relief obtains.
11.0 p.m.
I find it incredible that the Government should have done this as part of its social contract. These are not wealthy people. They are not people who ought to be asked to pay the price of the social contract. This change will do considerable harm to savings. It will sweep away any incentive to save at a lower income level. The amendment provides a limited improvement. It is not a very expensive improvement. I hope the Government will accept the amendment.

Mr. Higgins: I rise to speak about the amendment moved by the hon. Member for Cornwall, North (Mr. John Pardoe) and to support Amendments Nos. 113 and 114 standing in the names of my hon. Friends and myself.
All the amendments tabled in Committee and today have basically the same objective. They constitute an extremely important set of amendments. The proposals which the Chancellor of the Exchequer put forward in his Budget were to reduce the amount which my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) had previously suggested should be the limit below which investment income—that is to say income from past savings—should be charged, namely, at the earned income rate rather than at the so-called unearned income rate. The purpose of these amendments is to restore the position to what it was under the previous Conservative Government and before this Budget.
It is very important that these amendments should be put forward and carried. First, they encourage savings. There is no matter more important in the present economic situation. We should do everything we can to encourage savings.
I think the House will wish to attach importance to my second point. A number of people living on fixed incomes have been those worst hit by inflation. It is

therefore extremely important that we should not attack this group, as this Budget has done, and add the problems of increasing taxation to the problems of inflation.
I agree that many of these people are not wealthy. The limit set by my right hon. Friend the Member for Altrincham and Sale was far from generous. To cut it further will affect a large number of people, many of them retired for a considerable period, living on incomes from savings.
From our constituency experience we know that a great many of these people suffer a very real decline in their standard of living. They have done so over a period of time. The Government's proposals will add to their problems. It is right that we should move these amendments on this occasion to recognise the problems which they face, which get worse as the rate of inflation, under this Government, increases. Therefore we seek to help people living on fixed incomes in one of the few ways open to us. Many of them have benefited from the increased national insurance pensions. None the less, the purchasing power of their total income, including the savings income which they already had, has declined steadily and is now declining faster than ever before.
Therefore I ask my hon. Friends to support the amendment—if necessary, since that is the one selected, the Liberal amendment—which is the same in substance as that which we have moved on previous occasions. I hope that my hon. Friends will join me in the Division Lobby with that object in view.

Mr. Joel Barnett: We are coming to a very important and interesting stage in the Bill. We had better recognise that, when all the talk and excuses for the amendment have finished, the Opposition—Conservative and Liberal—are proposing to give £40 million in tax relief to those with investment incomes above £1,000 a year. [Interruption.] I am sure that it will be noted outside. I do not pretend that these people are wealthy, but if £40 million of tax relief is to be given, it should be a matter of priorities who should get it. Do we give the £40 million to those with investment incomes of more than £1,000 a year or to the more deserving of whom we know?
I have no intention of suggesting that the House should accept the amendment. I am absolutely astonished that the joint Opposition, if I may put it that way, are prepared to vote for this £40 million, for £120 million on the last amendment, for £15 million on the amendment before that and for £300 million on an amendment that they have tabled for tomorrow. Presumably they mean it. Otherwise, I do not know why they tabled it. That is a total of nearly £500 million.
I assume that among hon. Gentlemen opposite who intend to vote for the amendment are those who have told us that we should not reflate. They are now suggesting not only that we should reflate but that we should reflate in a specific way which will give an increase in income to those with the lowest priority.

Mr. Nigel Lawson: rose—

Mr. Barnett: There will be plenty of opportunities to debate these matters at the hustings very soon. We are delighted that both Oppositions have decided on their priorities. They are not our priorities. Without wasting any further time, I ask my right hon. and hon. Friends to vote against the amendment.

Mr. Peyton: I rise for only a moment, to point out two matters of real interest about the extraordinary speech of the Chief Secretary, to which we have just listened, echoing, as best he can, his master's voice.
The first was his utter refusal to give way and discuss anything in the House of Commons. He would rather retain his remarks for the hustings, where the lack of sense about certain matters will be less obvious.
The second was the interesting comment that he made, or appeared to make, at the beginning of his remarks, to the effect that anybody with an income of more than £1,000 a year—[Hon. Memmers: "Unearned."]—I know of this favoured discrimination, which the Labour Party loves so much. The hon. Gentleman said that anybody with that kind of inordinate wealth should not be entitled to any consideration at all. In other words, we reach the conclusion that, after a few more years of Socialist Government—

Mr. Kaufman: Which we shall have.

Mr. Peyton: This country has not gone wholly mad yet.
After a few more years of Socialist Government the end and the purpose would be to confine people to this kind of miserable pedestrian living which hon. Members opposite like so much.

Mr. Dick Taverne: We are facing an extraordinary situation in which Opposition Members are in a position to carry any amendment which they move. They therefore have power, and they do not exercise responsibility.
The position is that under the Finance Bill at this stage it is impossible to increase taxation. All we can do is to lessen the burden of taxation. If hon. Members opposite are serious about talking of a financial crisis, or of a serious economic situation—and as the Chancellor, at the same time, has pointed out the need to balance the Budget or to limit the excess of public expenditure over income—they should consider the consequences of the actions in which they are now indulging.
There may be merits for some of these amendments, but on the last occasion £120 million was removed from taxation. It is unusual at this stage of the Finance Bill for Opposition Members to vote to reduce the Budget by that amount. This is not a minor amount. It is £40 million, and with the other £14 million we have a total of £170 million off the previous sum.
That is not a light matter. I hope that a number of Opposition Members will take this to heart, realise what they are doing, and absent themselves from the Lobby, so that the amendment is not carried.

Mr. Tom Boardman: I did not intend to intervene, but the Chief Secretary has referred to his lowest priority. It should be clearly understood whether, by that, he means those who have savings income earned by working hard all their lives. He referred to investment income, which is savings that have been invested. The Clause applies to those who worked hard all their lives, and if the Chief Secretary says that it does not apply to those who have saved sufficient to get an investment income of this


kind he should say so in the Bill. He referred to people of lowest priority.
The clause will include those who have worked hard all their lives to put aside part of their earning for their old age—for a savings or investment income of £1,000 a year. He also referred to giving to these people. It should not be necessary to remind Treasury Ministers that they would not be giving but refraining from taking away. The Chief Secretary should recognise that.

Mr. Paul Dean: I much regret that the Chief Secretary has not addressed himself to the main arguments put in the debate. He seems to have disregarded the commitment on the Floor when this clause was discussed, when the Financial Secretary, in response to many speeches from the Opposition, undertook to consider carefully the position of many people who have retired on a modest investment income which they have saved all their lives to achieve. They are not entitled to national insurance pensions or other sums which are to some degree inflation-proof. The hon. Gentleman said that we were suggesting that something should be given back to these people. We are in fact saying that the Bill is taking from people who are already suffering the effects of inflation.
I hope that before the end of the debate the Chief Secretary will address himself to our remarks, which concern people on modest incomes, who have saved hard all their lives and who will be penalised by this increased taxation.

11.15 p.m.

Mr. Kenneth Clarke: The hon. and learned Member for Lincoln (Mr. Taverne) echoed the Chief Secretary's remarks in suggesting that the amendment was a late afterthought by the Opposition. He implied that having suddenly found ourselves with the power to rewrite the Finance Bill—as we do, because of mismanagement by the Government—we were making ill-considered changes, with unfortunate and inflationary effects. In Committee on the Floor of the House this part of the Bill was singled out for attack by the Opposition. I am sure that my hon. Friends and the Liberal Party are making a careful choice of priority in forcing the amendment on the Government.
At the last Labour Party Conference, the present Chancellor said that a Labour Government, if elected, would make the rich squeal. The Budget and the Bill show that their interpretation of making the rich squeal is in fact mean-minded legislation against people with comparatively modest incomes derived from savings. People with investment income below £2,000 are not the very rich. Of course they are better off than many because they have carefully provided for their retirement, but in these inflationary times and with the present rates of interest, income of the sort affected by the Government's proposals can be realised from a capital sum of £8,000 or £9,000. To say that a man who has managed to save that sort of sum during his working life deserves punitive taxation is ridiculous.
I throw back what the Minister said about inflation and ask him to accept his responsibility to minimise its effects on the groups most adversely affected. No group has been more adversely affected than those who depend on their savings income when they find that it is not inflation proof and that its real purchasing power has been sadly reduced. At a time like this, for the Government to propose increasing punitive taxation on savings income simply because they have a prejudice against those with the good fortune or thriftiness of habit to provide for their retirement—

Mr. John Garrett: The hon. Member should have said "hard work".

Mr. Clarke: —and hard work, of course—is the most irresponsible behaviour. We want to protect particularly those who have retired against the ravages of their savings income that the Government would produce. We do not accept that this is irresponsible, ill-considered behaviour. We have carefully considered this priority and believe it is the right one. If the Chief Secretary re-reads the reports of the Committee debates he will discover the arguments that have brought us to the amendment.

Mr. Nigel Lawson: I shall not detain the House for long. I certainly do not wish to address my remarks to the Government Front Bench, and certainly not to the Chief Secretary, with his contemptuous attitude towards every argument


that has been advanced from the Opposition side of the House and the contemptible way in which he stated that people with a savings income of £1,000 a year were the lowest priority of all. I certainly do not intend to respond to that sort of approach.
I intend to address my remarks to the only serious argument that we have heard from the Government side of the House, which was advanced by the hon. and learned Member for Lincoln (Mr. Taverne). The amount of £120 million is a deceptive figure. We were told first that it might be £50 million, or it might be £120 million. It has no impact during the present fiscal year, despite what the Chancellor tried to pretend to the House about the borrowing requirement for this year or about demand this year.
I do not know whether hon. Members on the Government side understand the position, but the matter concerning that tax is in dispute. We have been told by the Financial Secretary that there is first to be an appeal by the Customs and Excise against this and that if that appeal goes against the Customs and Excise there may be an appeal to a higher court. If that still goes against the Customs and Excise, there will have to be a vetting of every claim by a retailer for repayment, and at the end of the day it will have to be decided which customers should get back that tax. Therefore, it would be years before this would have any effect on demand, on the monetary situation, or on the borrowing requirement. We can dispose of that argument.
What we are left with is the figure of £14 million from a previous amendment and £40 million if the amendment is carried—a total of £54 million. It is perfectly open to the Chancellor—I hope that he will take the opportunity—to cut public expenditure by an equivalent amount. He can announce the cut when he introduces his mini-Budget next week. Some of us would like him to do that, as he has expressed such concern about any increase in the borrowing requirement. Some of us wish that he would reveal to the House by how much he has increased the borrowing requirement this year by increases in public expenditure since the Budget. He has done it by a consider-

able amount. He should come clean about this matter.
However, we are now talking about a very much smaller sum than the hon. and learned Member for Lincoln thought we were talking about. This is important, because we on the Opposition side of the House wish to be responsible.

Mr. Thomas Cox: Tell us about your house.

Mr. Lawson: This is a very serious matter, and that is why the amendment should be carried. The overall budgetary situation, the overall financial judgment and the overall borrowing requirement will not be thrown out of kilter by the amendments that have passed today. I find it will be thrown out of kilter by what the Chancellor has to announce next week.

Mr. Adley: I have many thousands of constituents—

Mr. Joel Barnett: So has every hon. Member.

Mr. Adley: I tell the Chief Secretary that I have every right and intention of fighting as hard for the rights of my constituents as he fights for the rights of his. I have many thousands of constituents who are old, who have worked hard and served their country, very often abroad, for many years, and who are now retired and are desperately trying to retain a standard of living for which they have worked and to which they have grown accustomed. They are finding it exceedingly difficult. I have pledged myself to do everything I can to support their efforts to retain a reasonable standard of living. I will not accept from the Chief Secretary suggestions that my constituents are any less justified in wanting to protect their standard of living than anyone else in this country.
I take up a point made by the hon. and learned Member for Lincoln (Mr. Taverne) when he suggested that the Opposition bore responsibility in this respect. We are sensible of the power the people put in the hands of the elected Members of this House at the last election. If he and Labour Members are as concerned as he gives the impression they are, the solution may well be that the Chancellor and his right hon. Friends should invite Members of other parties


in the House to advise them so that the Government may be sure that a proper degree of responsibility is exercised by all hon. Members.

Sir A. Meyer: The relative position of the people we are talking about is that much worse than has been explained so far because they have a small sum of capital savings or investment and they are debarred from all forms of means-tested benefit. Therefore, with every fresh means-tested benefit evolved by those of us who seek to direct the help to those in greatest need the position of these people is made that much worse.

Mr. Pardoe: With the leave of the House, I seek to reply to the debate. I am only sorry that the Chief Secretary did not answer the arguments adduced in favour of the amendment, or debate the question of investment income surcharge versus other forms of income tax. I simply ask him why the Government changed the threshold. They have never made a case for doing that. This is no time—in an inflationary situation—to lower the income tax threshold, but that is what they have done. As for the hon. Gentleman's point about priorities, I can say only that this is not the most important way in which we can spend f40 million. He must bear in mind, however, that not all of our amendments are selected for debate. I prepared and tabled amendments in Committee and on Report to change the whole basis of tax allowances for children and to increase family allowances in exchange for that proposal. That would have been redistributive in a way that I would have thought would appeal to the Government. The amendments were not debated, and there are many other such proposals on which I would have much preferred to spend the money than on the amendment now being discussed.
I want to reply to the important point raised by the hon. and learned Member for Lincoln (Mr. Taverne). I hope that he will accept that I do not regard this amendment or the others that we have supported this evening as being in any way irresponsible. The hon. and learned Gentleman put forward serious and important arguments, and they have been made

in the House before. They were made well before King Charles lost his head. The argument whether Parliament or the Government were able to raise taxation was carried on repeatedly then. We are not going outside the remit of our responsibilities, nor are we exceeding our duties in controlling the Government's means and methods of redistributing the burden of income tax. If the Government think they have some God-given right to distribute or redistribute the burden of income tax, they must accept that Parliament controls that and that we are exercising that power. The fact that this is the first Parliament since the war which has had the votes and the power to do it is neither here nor there. The hon. and learned Gentleman must realise that we approach the situation of this Government with great responsibility. [Interruption.] Yes, indeed. Hon. Members opposite must get used to the new rules of the game called minority government. That means that no Government can steam-roller their ideas through the House without trying to convince, argue and persuade.
11.30 p.m.
We offered this Government, as we offered the Government—had there been one—of the Leader of the Conservative Party, support from the back benches on an agreed programme. The Prime Minister turned that offer down. The answer to the Chief Secretary and to the hon. and learned Member for Lincoln is this: yes, indeed, the Government could have brought forward an agreed Budget and we would have supported it had they consulted us in the first place. That is a perfectly legitimate way of running a minority Government.
The Government did not accept that offer. Because the Government did not accept that offer, we are now asked to take the Government's proposals and their Budget, lock, stock and barrel. We are not taking the Government's proposals, lock, stock and barrel. They have not argued the case. We intend to press the amendment.

Question put, That the amendment be made:—

The House divided: Ayes 296, Noes 280.

Division No. 85]
AYES
[10.42 p.m


Abse, Leo
de Freitas, Rt. Hn. Sir Geoffrey
Huckfield, Leslie


Allaun, Frank
Delargy, Hugh
Hughes, Rt. Hn. Cledwyn (Anglesey)


Archer, Peter
Dell, Rt. Hn. Edmund
Hughes, Mark (Durham)


Armstrong, Ernest
Dempsey, James
Hughes, Robert (Aberdeen, North)


Ashley, Jack
Doig, Peter
Hughes, Roy (Newport)


Ashton, Joe
Dormand, J. D.
Hunter, Adam


Atkins Ronald
Douglas-Mann, Bruce
Irvine, Rt. Hn. Sir A. (L'p'I, EdgeHI)


Atkinson, Norman
Duffy, A. E. P.
Irving, Rt. Hn. Sydney (Dartford)


Bagier, Gordon, A. T.
Dunn, James A.
Jackson, Colin


Barnett, Guy (Greenwich)
Dunnett, Jack
Janner, Greville


Barnett, Joel (Heywood &amp; Royton)
Dunwoody, Mrs. Gwyneth
Jay, Rt. Hn. Douglas


Bates, Alt
Eadie, Alex
Jeger, Mrs. Lena


Baxter, William
Edelman, Maurice
Jenkins, Hugh (W'worth, Putney)


Benn, Rt. Hn. Anthony Wedgwood
Edge, Geoff
Jenkins, Rt. Hn. Roy (B'ham, St'fd)


Bennett, Andrew F. (Stockport, N.)
Edwards, Robert (W'hampton, S.E.)
John, Brynmor


Bidwell, Sydney
Ellis, John (Brigg &amp; Scunthorpe)
Johnson, James (K'ston uponHull W)


Bishop, E. S.
Ellis, Tom (Wrexham)
Johnson, Walter (Derby, S.)


Blenkinsop, Arthur
English, Michael
Jones, Barry (Flint, E.)


Boardman, H. (Leigh)
Evans, Fred (Caerphilly)
Jones, Dan (Burnley)


Booth, Albert
Evans, Ioan (Aberdare)
Jones, Gwynoro (Carmarthen)


Boothroyd, Miss Betty
Evans, John (Newton)
Jones, Alec (Rhondda)


Bottomley, Rt. Hon. Arthur
Ewing, Harry (St'ling, F'kirk &amp; G'm'th)
Judd, Frank


Boyden, James (Bishop Auckland)
Faulds, Andrew
Kaufman, Gerald


Bradley, Tom
Fernyhough, Rt. Hn. E.
Kelley, Richard


Broughton, Sir Alfred
Fitch, Alan (Wigan)
Kerr, Russell


Brown, Bob (Newcastle upon Tyne, W.)
Fitt, Gerard (Belfast, W.)
Kilroy-Silk, Robert


Brown, Hugh D. (Glasgow, Provan)
Flannery, Martin
Kinnock, Neil


Brown, Ronald (H'kney, S. &amp; Sh'ditch)
Fletcher, Raymond (IIkeston)
Lambie, David


Buchan, Norman
Fletcher, Ted (Darlington)
Lamborn, Harry


Butler, Mrs. Joyce (H' gey, WoodGreen)
Foot, Rt. Hn. Michael
Lamond, James


Callaghan, Jim (M'dd'ton &amp; Pr'wch)
Ford, Ben
Latham, Arthur (City of W'minster P'ton)


Campbell, Ian
Forrester, John
Lawson, George (Motherwell &amp; Wishaw)


Cant, R. B.
Fowler, Gerry (The Wrekin)
Leadbitter, Ted


Carmichael, Neil
Fraser, John (Lambeth, Norwood)
Lee, John


Carter, Ray
Freeson, Reginald
Lestor, Miss Joan (Eton &amp; Slough)


Carter-Jones, Lewis
Galpern, Sir Myer
Lewis, Arthur (Newham, N.)


Castle, Rt. Hn. Barbara
Garrett, John (Norwich, S.)
Lewis, Ron (Carlisle)


Clemitson, Ivor
Garrett, W. E. (Wallsend)
Lipton, Marcus


Cocks, Michael
George, Bruce
Loughlin, Charles


Cohen, Stanley
Gilbert, Dr. John
Loyden, Eddie


Coleman, Donald
Ginsburg, David
Lyons, Edward (Bradford, W.)


Colquhoun, Mrs. M. N.
Gourlay, Harry
Mabon, Dr. J. Dickson


Conlan, Bernard
Graham, Ted
McCartney, Hugh


Cook, Robert F. (Edinburgh, C.)
Grant, George (Morpeth)
McElhone, Frank


Craigen, J. M. (G'gow, Maryhill)
Grant, John (Islington, C.)
MacFarquhar, Roderick


Cronin, John
Griffiths, Eddie (Sheffield, Brightside)
McGuire, Michael


Crosland, Rt. Hn. Anthony
Hamilton, James (Bothwell)
Mackenzie, Gregor


Cryer, G. R.
Hamilton, William (Fife, C.)
Maclennan, Robert


Cunningham, G. (Isl'ngt'n, S &amp; F'sb'ry)
Hamling, William
McMillan, Tom (Glasgow, C.)


Cunningham, Dr. John A. (Whiteh'v'n)
Hardy, Peter
Madden, M. O. F.


Dalyell, Tam
Harper, Joseph
Magee, Bryan


Davidson, Arthur
Harrison, Walter (Wakefield)
Mahon, Simon


Davies, Bryan (Enfield, N.)
Hatton, Frank
Mallalieu, J. P. W.


Davies, Denzil (Llanelli)
Healey, Rt. Hn. Denis
Marks, Kenneth


Davies, Ifor (Gower)
Heffer, Eric S.
Marquand, David


Davis, Clinton (Hackney, C.)
Hooley, Frank
Marshall, Dr. Edmund (Goole)


Deakins, Eric
Horam, John
Mason, Rt. Hn. Roy


Dean, Joseph (Leeds, W.)
Howell, Denis (B'ham, Small Heath)
Meacher, Michael




Mellish, Rt. Hn. Robert
Robertson, John (Paisley)
Thorne, Stan (Preston, S.)


Mendelson, John
Roderick, Caerwyn E.
Tierney, Sydney


Millan, Bruce
Rodgers, George (Chorley)
Tinn, James


Miller, Dr. M. S. (E. Kilbride)
Rodgers, William (Teesside, St'ckton)
Tomlinson, John


Mitchell, R. C. (S'hampton. Itchen)
Rooker, J. W.
Tomney, Frank


Molloy, William
Roper, John
Torney, Tom


Moonman, Eric
Rose, Paul B.
Tuck, Raphael


Morris, Alfred (Wythenshawe)
Ross, Rt. Hn. William (Kilmarnock)
Urwin, T. W.


Morris, Charles R. (Openshaw)
Rowlands, Edward
Varley, Rt. Hn. Eric G.


Morris, Rt. Hn. John (Aberavon)
Sandelson, Neville
Wainwright, Edwin (Dearne Valley)


Moyle, Roland
Sedgemore. Bryan
Walden, Brian (B'm'ham, Ladywood)


Murray, Ronald King
Selby, Harry
Walker, Harold (Doncaster)


Newens, Stanley (Harlow)
Shaw, Arnold (Redbridge, Ilford, S.)
Walker, Terry (Kingswood)


Oakes, Gordon
Sheldon, Robert (Ashton-under-Lyne)
Watkins, David


Ogden, Eric
Shore, Rt. Hn. Peter (S'pney &amp; P'plar)
Weitzman, David


O'Halloran, Michael
Short, Mrs. Renée (W'hamp'n, N.E.)
Wellbeloved, James


O'Malley, Brian
Silkin, Rt. Hn. John (L'sham, D'ford)
White, James


Orbach, Maurice
Silkin, Rt. Hn. S.C.(S'hwark, Dulwich)
Whitehead, Phillip


Ovenden, John
Sillars, James
Whitlock, William


Owen, Dr. David
Silverman, Julius
Willey, Rt. Hn. Frederick


Padley, Walter
Skinner, Dennis
Williams, Alan (Swansea, W.)


Palmer, Arthur
Small, William
Williams, Alan Lee (Hvrng, Hchurch)


Park, George (Coventry, N.E.)
Smith, John (Lanarkshire, N.)
Williams, Rt. Hn. Shirley (H'f'd &amp; St'ge)


Parker, John (Dagenham)
Snape, Peter
Williams, W. T. (Warrington)


Parry, Robert
Spearing, Nigel
Wilson, Alexander (Hamilton)


Pavitt, Laurie
Spriggs, Leslie
Wilson, Rt. Hn. Harold (Huyton)


Pendry, Tom
Stallard, A. W.
Wilson, William (Coventry, S.E.)


Perry, Ernest G.
Stewart, Rt. Hn. Michael (Fulham)
Wise, Mrs. Audrey


Phipps, Dr. Colin
Stoddart, David (Swindon)
Woodall, Alec


Prentice, Rt. Hn. Reg.
Stonehouse, Rt. Hn. John
Woof, Robert


Prescott, John
Stott, Roger
Wrigglesworth, Ian


Price, Christopher (Lewisham, W.)
Strang, Gavin
Young, David (Bolton, E.)


Price, William (Rugby)
Strauss, Rt. Hn. G. R.



Radice, Giles
Summerskill, Rt. Hn. Shirley
TELLERS FOR THE AYES:


Richardson, Miss Jo
Swain, Thomas
Mr. John Golding and


Roberts, Albert (Normanton)
Taverne, Dick
Mr. Thomas Cox.


Roberts, Gwilym (Cannock)
Thomas, Jeffrey (Abertillery)





NOES


Adley, Robert
Clark, William (Croydon, S.)
Galbraith, Hn. T. G. D.


Aitkon, Jonathan
Clarke, Kenneth (Rushcliffe)
Gardiner, George (Reigate &amp; Banstead)


Alison, Michael (Barkston Ash)
Clegg, Walter
Gardner, Edward (S. Fylde)


Allason, James (Hemel Hempstead)
Cockcroft, John
Gibson-Watt, Rt. Hn. David


Amery, Rt. Hn. Julian
Cooke, Robert (Bristol, W.)
Gilmour, Rt. Hn. Ian (Ch'sh' &amp; Amsh'm)


Ancram, M.
Cope, John
Gilmour, Sir John (Fife, E.)


Archer, Jeffrey
Cordle, John
Glyn, Dr. Alan


Atkins, Rt. Hn. Humphrey (Spelthorne)
Cormack, Patrick
Goodhart, Philip


Awdry, Daniel
Corrie, John
Goodhew, Victor


Balniel, Rt. Hn. Lord
Costain, A. P.
Goodlad, A.


Banks, Robert
Crouch, David
Gorst, John


Beith, A. J.
Crowder, F. P.
Gow, Ian (Eastbourne)


Bell, Ronald
Davies, Rt. John (Knutstord)
Gower, Sir Raymond (Barry)


Bennett, Sir Frederic (Torbay)
d'Avigdor-Goldsmid, Maj. -Gen. James
Grant, Anthony (Harrow, C.)


Bennett, Dr. Reginald (Fareham)
Dean, Paul (Somerset, N.)
Gray, Hamish


Benyon, W.
Deedes, Rt. Hn. W. F.
Grieve, Percy


Berry, Hon. Anthony
Dixon, Piers
Griffiths, Eldon (Bury St. Edmunds)


Brittan, Leon
Dodds-Parker, Sir Douglas
Grimond, Rt. Hn. J.


Biggs-Davison, John
Dodsworth, Geoffrey
Grist, Ian


Blaker, Peter
Douglas-Home, Rt. Hn. Sir Alec
Grylls, Michael


Boardman, Tom (Leicester, S.)
Drayson, Burnaby
Gurden, Harold


Body, Richard
du Cann, Rt. Hn. Edward
Hall, Sir John


Boscawen, Hon. Robert
Durant, Tony
Hall-Davies, A. G. F.


Bowden, Andrew (Brighton, Kemptown)
Dykes. Hugh
Hamilton, Michael (Salisbury)


Boyson, Dr. Rhodes (Brent, N.)
Eden, Rt. Hn. Sir John
Hampson, Dr. Keith


Braine, Sir Bernard
Edwards, Nicholas (Pembroke)
Hannam, John


Bray, Ronald
Elliott, Sir William
Harrison, Col. Sir Harwood (Eye)


Brittan, John
Emery, Peter
Harvie Anderson, Rt. Hn. Miss


Brocklebank-Fowler, Christopher
Ewing, Mrs. Winifred (Moray &amp; Nairn)
Hastings, Stephen


Brown, Sir Edward (Bath)
Eyre, Reginald
Havers, Sir Michael


Bruce-Gardyne, J.
Fairgrieve, Russell
Hayhoe, Barney


Bryan, Sir Paul
Farr, John
Heath, Rt. Hn. Edward


Buchanan-Smith, Alick
Fell, Anthony
Henderson, Douglas (Ab'rd'nsh're, E)


Buck, Antony
Fenner, Mrs. Peggy
Henderson, J.S.B. (Dunbartonshire, E.)


Budgen, Nick
Fidler, Michael
Heseltine, Michael


Bulmer, Esmond
Finsberg, Geoffrey
Higgins, Terence


Burden, F. A.
Fisher, Sir Nigel
Hill, James A.


Butler, Adam (Bosworth)
Fletcher, Alexander (Edinburgh, N.)
Holland, Philip


Carlisle, Mark
Fletcher-Cooke, Charles
Hooson, Emlyn


Carr, Rt. Hn. Robert
Fookes, Miss Janet
Howe, Rt. Hn. Sir Geoffrey (Surry, E)


Chalker, Mrs. Lynda
Fowler, Norman (Sutton C'field)
Howell, David (Guildford)


Channon, Paul
Fox, Marcus
Howell, Ralph (Norfolk, North)


Chataway, Rt. Hn. Christopher
Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
Howells, Geraint (Cardigan)


Churchill, W. S.
Freud, Clement
Hunt, John


Clark, A. K. M. (Plymouth, Sutton)
Fry, Peter
Hurd Douglas




Hutchison, Michael Clark
Mitchell, David (Basingstoke)
Shersby, Michael


Iremonger, T. L.
Moate, Roger
Silvester, Fred


Irvine, Bryant Godman (Rye)
Molyneaux, James
Sims, Roger


James, David
Money, Ernle
Sinclair, Sir George


Jenkin, Rt. Hn. P. (R'dgeW'std &amp; W'fd)
Monro, Hector
Skeet, T. H. H.


Jessel, Toby
Moore, J. E. M. (Croydon, C.)
Smith, Cyril (Rochdale)


Johnson Smith, G. (E. Grinstead)
Morgan-Giles, Rear-Adm.
Smith, Dudley (W'wick &amp; L'mington)


Johnston, Russell (Inverness)
Morris, Mitchell (Northampton, S.)
Spence, John


Jones, Arthur (Daventry)
Morrison, Charles (Devizes)
Spicer, Jim (Dorset, W.)


Jopling, Michael
Morrison, Peter (City of Chester)
Spicer, Michael (Worcestershire, S.)


Joseph, Rt. Hn. Sir Keith
Mudd, David
Sproat, lain


Kaberry, Sir Donald
Neave, Airey
Stainton, Keith


Kellett-Bowman, Mrs. Elaine
Neubert, Michael
Stanbrook, Ivor


Kershaw, Anthony
Newton, Tony (Braintree)
Stanley, John


Kilfedder, James A.
Nicholis, Sir Harmar
Steel, David


Kimball, Marcus
Normanton, Tom
Steen, Anthony (L'pool, Wavertree)


King, Evelyn (Dorset, S.)
Onslow, Cranley
Stewart, Donald (Western Isles)


King, Tom (Bridgwater)
Oppenheim, Mrs. Sally
Stewart, Ian (Hitchin)


Kirk, Peter
Orr, Capt. L. P. S.
Stodart, R. Hn. A. (Edinburgh, W.)


Kitson, Sir Timothy
Osborn, John
Stokes, John


Knight, Mrs. Jill
Page, Rt. Hn. Graham (Crosby)
Stradling Thomas, John


Knox, David
Page, John (Harrow, W.)
Taylor, Edward M. (Glgow, C'cart)


Lamont, Norman
Pardoe, John
Taylor, Robert (Croydon, N.W.)


Lane, David
Parkinson, Cecil (Hertfordshire, S.)
Tebbit, Norman


Langford-Holt, Sir John
Pattie, Geoffrey
Temple-Morris, Peter


Latham, Michael (Melton)
Percival, Ian
Thatcher, Rt. Hn. Margaret


Lawrence, Ivan
Peyton, Rt. Hn. John
Thorpe, Rt. Hn. Jeremy


Lawson, Nigel (Blaby)
Pink, R. Bonner
Townsend, C. D.


Lester, Jim (Beeston)
Price, David (Eastleigh)
Trotter, Neville


Lewis, Kenneth (Rtland &amp; Stmford)
Prior, Rt. Hn. James
Tugendhat, Christopher


Lloyd, Ian (Havant &amp; Waterloo)
Raison, Timothy
Tyler, Paul


Luce, Richard
Rathbone, Tim
van Straubenzee, W. R.


McAdden, Sir Stephen
Rawlinson, Rt. Hn. Sir Peter
Vaughan, Dr. Gerard


MacArthur, Ian
Redmond, Robert
Viggers, Peter


MacCormack, Iain
Rees, Peter (Dover &amp; Deal)
Waddington, David


McCrindle, R. A.
Rees-Davies, W. R.
Wainwright, Richard (Colne Valley)


Macfarlane, Neil
Reid, George
Wakeham, John


MacGregor, John
Renton, Rt. Hn. Sir David (H't' gd' ns' re)
Walder, David (Clitheroe)


McLaren, Martin
Renton, R. T. (Mid-Sussex)
Walker, Rt. Hn. Peter (Worcester)


Macmillan, Rt. Hn. M. (Farnham)
Rhys Williams, Sir Brandon
Walker-Smith, Rt. Hn. Sir Derek


McNair-Wilson, Michael (Newbury)
Ridley, Hn. Nicholas
Wall, Patrick


McNair-Wilson, Patrick (New Forest)
Ridsdale, Julian
Warren, Kenneth


Madel, David
Rifkind, Malcolm
Watt, Hamish


Marshall, Michael (Arundel)
Rippon, Rt. Hn. Geoffrey
Wells, John


Marten, Neil
Roberts, Michael (Cardiff, N.-W.)
Wiggin, Jerry


Mather, Carol
Roberts, Wyn (Conway)
Wilson, Gordon (Dundee, E.)


Maude, Angus
Rodgers, Sir John (Sevenoaks)
Winstanley, Dr. Michael


Maudling, Rt. Hn. Reginald
Ross, Stephen (Isle of Wight)
Winterton, Nicholas


Mawby, Ray
Rossi, Hugh (Hornsey)
Worsley, Sir Marcus


Maxwell-Hyslop, R. J.
Rost, Peter
Young, Sir George (Ealing, Acton)


Mayhew, Christopher (G'wh, W'wch, E)
Royle, Sir Anthony



Mayhew, Patrick (RoyalT'bridge Wells)
St. John-Stevas, Norman
TELLERS FOR THE NOES:


Meyer, Sir Anthony
Scott-Hopkins, James
Mr. Paul Hawkins and


Miller, Hal (B'grove &amp; R'ditch)
Shaw, Giles (Pudsey
Mr. Spencer Le Marchant.


Mills, Peter
Shaw, Michael (Scarborough)



Miscampbell, Norman
Shelton, Willam (L'mb'th, Streath'm)

Division No. 86.]
AYES
[11.34 p.m.


Adley, Robert
Fisher, Sir Nigel
Latham, Michael (Melton)


Aitken, Jonathan
Fletcher, Alexander (Edinburgh, N.)
Lawrence, Ivan


Alison, Michael (Barkaton Ash)
Fletcher-Cooke, Charles
Lawson, Nigel (Blaby)


Allason, James (Hemel Hempstead)
Fookes, Miss Janet
Le Marchant, Spencer


Amery, Rt. Hn. Julian
Fowler, Norman (Sutton C'field)
Lester, Jim (Beeston)


Ancram, M.
Fox, Marcus
Lewis, Kenneth (Rtland &amp; Stmford)


Archer, Jeffrey
Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
Lloyd, Ian (Havant &amp; Waterloo)


Atkins, Rt. Hn. Humphrey (Spelthorne)
Freud, Clement
Luce, Richard


Awdry, Daniel
Fry, Peter
McAdden, Sir Stephen


Baker, Kenneth
Galbraith, Hn. T. G. D.
MacArthur, Ian


Balniel, Rt. Hn. Lord
Gardiner, George (Reigate &amp; Banstead)
MacCormack, Iain


Banks, Robert
Gardner, Edward (S. Fylde)
McCrindle, R. A.


Beith, A. J.
Gibson-Watt, Rt. Hn. David
Macfarlane, Neil


Bell, Ronald
Gilmour, Rt. Hn. Ian (Ch'sh' &amp; Amsh'm)
MacGregor, John


Bennett, Sir Frederic (Torbay)
Gilmour, Sir John (Fife, E.)
McLaren, Martin


Bennett, Dr. Reginald (Fareham)
Glyn, Dr. Alan
Macmillan, Rt. Hn. M. (Farnham)


Benyon, W.
Goodhart, Philip
McNair-Wilson, Michael (Newbury)


Berry, Hon. Anthony
Goodhew, Victor
McNair-Wilson, Patrick (New Forest)


Biffen, John
Goodlad, A.
Madel, David


Biggs-Davison, John
Gorst, John
Marshall, Michael (Arundel)


Blaker, Peter
Gow, Ian (Eastbourne)
Mather, Carol


Boardman, Tom (Leicester, S.)
Gower, Sir Raymond (Barry)
Maude, Angus


Body, Richard
Grant, Anthony (Harrow, C.)
Maudling, Rt. Hn. Reginald


Boscawen, Hon. Robert
Gray, Hamish
Mawby, Ray


Bowden, Andrew (Brighton, Kemptown)
Grieve, Percy
Maxwell-Hyslop, R. J.


Boyson, Dr. Rhodes (Brent, N.)
Grimond, Rt. Hn. J.
Mayhew, Christopher (G'wh, W'wch, E)


Braine, Sir Bernard
Grist, Ian
Mayhew, Patrick (Royal T'bridge Wells)


Bray, Ronald
Grylls, Michael
Meyer, Sir Anthony


Brittan, Leon
Gurden, Harold
Miller, Hal (B'grove &amp; R'ditch)


Brocklebank-Fowler, Christopher
Hall, Sir John
Mills, Peter


Brown, Sir Edward (Bath)
Hall-Davies, A. G. F.
Miscampbell, Norman


Bruce-Gardyne, J.
Hamilton, Michael (Salisbury)
Mitchell, David (Basingstoke)


Bryan, Sir Paul
Hampson, Dr. Keith
Moate, Roger


Buchanan-Smith, Alick
Hannam, John
Molyneaux, James


Buck, Antony
Harrison, Col. Sir Harwood (Eye)
Money, Ernle


Budgen, Nick
Harvie Anderson, Rt. Hn. Miss
Monro, Hector


Bulmer, Esmond
Hastings, Stephen
Moore, J. E. M. (Croydon, C.)


Burden, F. A.
Havers, Sir Michael
Morgan-Giles, Rear-Adm.


Butler, Adam (Bosworth)
Hawkins, Paul
Morris, Michael (Northampton, S.)


Carlisle, Mark
Hayhoe, Barney
Morrison, Charles (Devizes)


Carr, Rt. Hn. Robert
Heath, Rt. Hn. Edward
Morrison, Peter (City of Chester)


Chalker, Mrs. Lynda
Henderson, Douglas (Ab 'rd' nsh 're, E)
Mudd, David


Chataway, Rt. Hn. Christopher
Henderson, J.S.B. (Dunbartonshire, E.)
Neave, Airey


Clark, A. K. M. (Plymouth, Sutton)
Heseltine, Michael
Neubert, Michael


Clark, William (Croydon, S.)
Higgins, Terence
Newton, Tony (Braintree)


Clarke, Kenneth (Rushcliffe)
Hill, James A.
Nicholls, Sir Harmar


Clegg, Walter
Holland, Philip
Normanton, Tom


Cockcroft, John
Hooson, Emlyn
Nott, John


Cooke, Robert (Bristol, W.)
Hordern, Peter
Onslow, Cranley


Cope, John
Howe, Rt. Hn. Sir Geoffrey (Surry, E)
Oppenheim, Mrs. Sally


Cordle, John
Howell, David (Guildford)
Orr, Capt. L. P. S.


Cormack, Patrick
Howell, Ralph (Norfolk, North)
Osborn, John


Corrie, John
Howells, Geraint (Cardigan)
Page, Rt. Hn. Graham (Crosby)


Costain, A. P.
Hunt, John
Page, John (Harrow, W.)


Crouch, David
Hurd, Douglas
Pardoe, John


Crowder, F. P.
Hutchison, Michael Clark
Parkinson, Cecil (Hertfordshire, S.)


Davies, Rt. Hn. John (Knutsford)
Iremonger, T. L.
Pattie, Geoffrey


d'Avigdor-Goldsmid, Maj. -Gen. James
Irvine, Bryant Godman (Rye)
Percival, Ian


Dean, Paul (Somerset, N.)
James, David
Peyton, Rt. Hn. John


Deedes, Rt. Hn. W. F.
Jenkin, Rt. Hn. P. (R'dge W'std &amp; W'fd)
Pink, R. Bonner


Dixon, Piers
Jessel, Toby
Price, David (Eastleigh)


Dodds-Parker, Sir Douglas
Johnson Smith, G. (E. Grinstead)
Prior, Rt. Hn. James


Dodsworth, Geoffrey
Johnston, Russell (Inverness)
Raison, Timothy


Douglas-Home, Rt. Hn. Sir Alec
Jones, Arthur (Daventry)
Rathbone, Tim


Drayson, Burnaby
Jopling, Michael
Rawlinson, Rt. Hn. Sir Peter


du Cann, Rt. Hn. Edward
Joseph, Rt. Hn. Sir Keith
Redmond, Robert


Durant, Tony
Kaberry, Sir Donald
Rees, Peter (Dover &amp; Deal)


Dykes, Hugh
Kellett-Bowman, Mrs. Elaine
Rees-Davies, W. R.


Eden, Rt. Hn. Sir John
Kershaw, Anthony
Reid, George


Edwards, Nicholas (Pembroke)
Kilfedder, James A.
Renton, Rt. Hn. Sir David (H't' gd 'ns' re)


Elliott, Sir William
Kimball, Marcus
Renton, R. T. (Mid-Sussex)


Emery, Peter
King, Evelyn (Dorset, S.)
Rhys Williams, Sir Brandon


Ewing, Mrs. Winifred (Moray &amp; Nairn)
King, Tom (Bridgwater)
Ridley, Hn. Nicholas


Eyre, Reginald
Kirk, Peter
Ridsdale, Julian


Fairgrieve, Russell
Kitson, Sir Timothy
Rifkind, Malcolm


Farr, John
Knight, Mrs. Jill
Rippon, Rt. Hn. Geoffrey


Fell, Anthony
Knox, David
Roberts, Michael (Cardiff, N.W.)


Fenner, Mrs. Peggy
Lamont, Norman
Roberts, Wyn (Conway)


Fidler, Michael
Lane, David
Rodgers, Sir John (Sevenoaks)


Finsberg, Geoffrey
Langford-Holt, Sir John
Ross, Stephen (Isle of Wight)




Rossi, Hugh (Hornsey)
Stanbrook, Ivor
Viggers, Peter


Rost, Peter (Derbyshire, S.E.)
Stanley, John
Waddington, David


Royle, Sir Anthony
Steen, Anthony (L'pool, Wavertree)
Wainwright, Richard (Colne Valley)


Sainsbury, Tim
Stewart, Donald (Western Isles)
Wakeham, John


St. John-Stevas, Norman
Stewart, Ian (Hitchin)
Walder, David (Clitheroe)


Scott-Hopkins, James
Stodart, R. Hn. A. (Edinburgh, W.)
Walker, Rt. Hn. Peter (Worcester)


Shaw, Giles (Pudsey)
Stokes, John
Walker-Smith, Rt. Hn. Sir Derek


Shaw, Michael (Scarborough)
Stradling Thomas, John
Wall, Patrick


Shelton, William (L'mb'th, Streath'm)
Taylor, Edward M. (Glgow, C'cart)
Warren, Kenneth


Shersby, Michael
Taylor, Robert (Croydon, N.W.)
Watt, Hamish


Silvester, Fred
Tebbit, Norman
Wells, John


Sims, Roger
Temple-Morris, Peter
Wiggin, Jerry


Skeet, T. H. H.
Thatcher, Rt. Hn. Margaret
Winterton, Nicholas


Smith, Cyril (Rochdale)
Thorpe, Rt. Hn. Jeremy
Worsley, Sir Marcus


Smith, Dudley (W'wick &amp; L'm'ngton)
Townsend, C. D.
Young, Sir George (Ealing, Acton)


Spence, John
Trotter, Neville



Spicer, Jim (Dorset, W.)
Tugendhat, Christopher
TELLERS FOR THE AYES:


Spicer, Michael (Worcestershire, S.)
Tyler, Paul
Mr. David Steel and


Sproat, Iain
van Straubenzee, W. R.
Dr. Michael Winstanley


Stainton, Keith
Vaughan, Dr. Gerard





NOES


Abse, Leo
Doig, Peter
Jackson, Colin


Allaun, Frank
Dormand, J. D.
Janner, Greville


Archer, Peter
Douglas-Mann, Bruce
Jay, Rt. Hn. Douglas


Armstrong, Ernest
Duffy, A. E. P.
Jeger, Mrs. Lena


Ashton, Joe
Dunn, James, A.
Jenkins, Hugh (W'worth, Putney)


Atkins, Ronald
Dunnett, Jack
Jenkins, Rt. Hn. Roy (B'ham, St'fd)


Atkinson, Norman
Dunwoody, Mrs. Gwyneth
John, Brynmor


Bagier, Gordon, A. T.
Eadie, Alex
Johnson, James (K'ston upon Hull, W)


Barnett, Guy (Greenwich)
Edelman, Maurice
Johnson, Walter (Derby, S.)


Barnett, Joel (Heywood &amp; Royton)
Edge, Geoff
Jones, Barry (Flint, E.)


Bates, Alf
Edwards, Robert (W'hampton, S.E.)
Jones, Dan (Burnley)


Baxter, William
Ellis, John (Brigg &amp; Scunthorpe)
Jones, Gwynoro (Carmarthen)


Benn, Rt. Hn. Anthony Wedgwood
Ellis, Tom (Wrexham)
Jones, Alec (Rhondda)


Bennett, Andrew F. (Stockport, N.)
English, Michael
Judd, Frank


Bidwell, Sydney
Ennals, David
Kaufman, Gerald


Bishop, E. S.
Evans, Fred (Caerphilly)
Kelley, Richard


Blenkinsop, Arthur
Evans, Ioan (Aberdare)
Kerr, Russell


Boardman, H.
Evans, John (Newton)
Kilroy-Silk, Robert


Booth, Albert
Ewing, Harry (St'ling, F'kirk &amp; G'm'th)
Kinnock, Neil


Boothroyd, Miss Betty
Faulds, Andrew
Lambie, David


Bottomley, Rt. Hon. Arthur
Fernyhough, Rt. Hn. E.
Lamborn, Harry


Boyden, James (Bishop Auckland)
Fitch, Alan (Wigan)
Lamond, James


Bradley, Tom
Flannery, Martin
Latham, Arthur(City of W'minster P'ton)


Broughton, Sir Alfred
Fletcher, Raymond (Ilkeston)
Lawson, George (Motherwell &amp; Wishaw)


Brown, Bob (Newcastle upon Tyne, W.)
Fletcher, Ted (Darlington)
Leadbitter, Ted


Brown, Hugh D. (Glasgow, Provan)
Foot, Rt. Hn. Michael
Lee, John


Brown, Ronald (H'kney, S. &amp; Sh'ditch)
Ford, Ben
Lestor, Miss Joan (Eton &amp; Slough)


Buchan, Norman
Forrester, John
Lewis, Arthur (Newham, N.)


Butler, Mrs. Joyce (H'gey, WoodGreen)
Fowler, Gerry (The Wrekin)
Lewis, Ron (Carlisle)


Callaghan, Jim (M'dd'ton &amp; Pr'wch)
Fraser, John (Lambeth, Norwood)
Lipton, Marcus


Campbell, Ian
Freeson, Reginald
Loughlin, Charles


Cant, R. B.
Galpern, Sir Myer
Loyden, Eddie


Carmichael, Neil
Garrett, John (Norwich, S.)
Lyons, Edward (Bradford, W.)


Carter, Ray
Garrett, W. E. (Wailsend)
Mabon, Dr. J. Dickson


Carter-Jones, Lewis
George, Bruce
McCartney, Hugh


Castle, Rt. Hn. Barbara
Gilbert, Dr. John
McElhone, Frank


Clemitson, Ivor
Ginsburg, David
Macfarlane, Neil


Cocks, Michael
Gourlay, Harry
McGuire, Michael


Cohen, Stanley
Graham, Ted
Mackenzie, Gregor


Coleman, Donald
Grant, George (Morpeth)
Maclennan, Robert


Colquhoun, Mrs. M. N.
Grant, John (Islington, C.)
McMillan, Tom (Glasgow, C.)


Conlan, Bernard
Griffiths, Eddie (Sheffield, Brightside)
Madden, M. O. F.


Cook, Robert F. (Edinburgh, C.)
Hamilton, James (Bothwell)
Magee, Bryan


Cox, Thomas
Hamilton, William (Fife, C.)
Mahon, Simon


Craigen, J. M. (G'gow, Maryhill)
Hamling, William
Mallalieu, J. P. W.


Cronin, John
Hardy, Peter
Marks, Kenneth


Crosland, Rt. Hn. Anthony
Harrison, Walter (Wakefield)
Marquand, David


Cryer, G. R.
Hattersley, Roy
Marshall, Dr. Edmund (Goole)


Cunningham, G. (Isl 'ngt 'n, S &amp; F'sb'ry)
Hatton, Frank
Meacher, Michael


Cunningham, Dr. John A. (Whiteh 'v' n)
Healey, Rt. Hn. Denis
Mellish, Rt. Hn. Robert


Dalyell, Tam
Heffer, Eric S.
Mendelson, John


Davidson, Arthur
Hooley, Frank
Mikardo, Ian


Davies, Bryan (Enfield, N.)
Horam, John
Millan, Bruce


Davies, Denzil (Llanelli)
Howell, Denis (B'ham, Small [...]eath)
Miller, Dr. M. S. (E. Kilbride)


Davies, Ifor (Gower)
Huckfield, Leslie
Mitchell, R. C. (S'hampton, Itchen)


Davis, Clinton (Hackney, C.)
Hughes, Rt. Hn. Cledwyn (Anglesey)
Molloy, William


Deakins, Eric
Hughes, Mark (Durham)
Moonman, Eric


Dean, Joseph (Leeds, W.)
Hughes, Robert (Aberdeen, North)
Morris, Alfred (Wythenshawe)


de Freitas, Rt. Hn. Sir Geoffrey
Hughes, Roy (Newport)
Morris, Charles R. (Openshaw)


Delargy, Hugh
Hunter, Adam
Morris, Rt. Hn John (Aberavon)


Dell, Rt. Hn. Edmund
Irvine, Rt. Hn. Sir A. (L'p'I, EdgeHI)
Moyle, Roland


Dempsey, James
Irving, Rt. Hn. Sydney (Dartford)
Murray, Ronald King




Newens, Stanley (Harlow)
Rowlands, Edward
Tomney, Frank


Oakes, Gordon
Sandelson, Neville
Torney, Tom


Ogden, Eric
Sedgemore. Bryan
Tuck, Raphael


O'Halloran, Michael
Selby, Harry
Urwin, T. W.


O'Malley, Brian
Shaw, Arnold (Redbridge, Ilford, S.)
Varley, Rt. Hn. Eric G.


Orbach, Maurice
Sheldon, Robert (Ashton-under-Lyne)
Wainwright, Edwin (Dearne Valley)


Ovenden, John,
Shore, Rt. Hn. Peter (S'pney &amp; P'plar)
Walden, Brian (B'm'ham, Ladywood)


Owen, Dr. David
Short, Mrs. Renée (W'hamp'n, N.E.)
Walker, Harold (Doncaster)


Padley, Walter
Silkin, Rt. Hn. John (L'sham, D'ford)
Walker, Terry (Kingswood)


Palmer, Arthur
Silkin, Rt. Hn. S. C. (S'hwark, Dulwich)
Watkins, David


Park, George (Coventry, N.E.)
Sillars, James
Weitzman, David


Parker, John (Dagenham)
Silverman, Julius
Wellbeloved, James


Parry, Robert
Skinner, Dennis
White, James


Pavitt, Laurie
Small, William
Whitehead, Phillip


Pendry, Tom
Smith, John (Lanarkshire, N.)
Whitlock, William


Perry, Ernest G.
Snape, Peter
Willey, Rt. Hn. Frederick


Phipps, Dr. Colin
Spearing, Nigel
Williams, Alan (Swansea, W.)


Prentice, Rt. Hn. Reg
Spriggs, Leslie
Williams, Alan Lee (Hvrng, Hchurch)


Prescott, John
Stallard, A. W.
Williams, Rt. Hn. Shirley(H'f'd &amp; St'ge)


Price, Christopher (Lewisham, W.)
Stewart, Rt. Hn. M. (H'sth, Fulham)
Williams, W. T. (Warrington)


Price, William (Rugby)
Stoddart, David (Swindon)
Wilson, Alexander (Hamilton)


Radice, Giles
Stonehouse, Rt. Hn. John
Wilson, Rt. Hn. Harold (Huyton)


Richardson, Miss Jo
Stott, Roger
Wilson, William (Coventry, S.E.)


Roberts, Albert (Normanton)
Strang, Gavin
Wise, Mrs. Audrey


Roberts, Gwilym (Cannock)
Strauss, Rt. Hn. G. R.
Woodall, Alec


Robertson, John (Paisley)
Summerskill, Rt. Hn. Shirley
Woof, Robert


Roderick, Caerwyn E.
Swain, Thomas
Wrigglesworth, Ian


Rodgers, George (Chorley)
Taverne, Dick
Young, David (Bolton, E.)


Rodgers, William (Teesside, St'ckton)
Thomas, Jeffrey (Abertillery)



Rooker, J. W.
Thorne, Stan (Preston, S.)
TELLERS FOR THE NOES:


Roper, John
Tierney, Sydney
Mr. John Golding and


Rose, Paul B.
Tinn, James
Mr. Joseph Harper.


Ross, Rt. Hn. William (Kilmarnock)
Tomlinson, John

Question accordingly agreed to

Mr. Joel Barnett: I beg to move, That further consideration of the Bill, as amended, be now adjourned.
I think the House will agree that we have made some remarkable progress.

Question put and agreed to.

Bill, as amended (in the Committee and in the Standing Committee), to be further considered tomorrow.

HOUSE OF COMMONS (SERVICES)

Ordered,
That the Catering Sub-Committee of the Select Committee on House of Commons (Services) have power to appoint persons with expert knowledge for the purpose of particular inquiries, either to supply information which is not readily available or to elucidate matters of complexity within the Sub-Committee's Order of Reference.—[Mr. Walter Harrison.]

ADJOURNMENT

Motion made, and Question proposed. That this House do now adjourn.—[Mr. Golding.]

Orders of the Day — UFFINGTON (WHITE HORSE)

11.45 p.m.

Mr. Michael McNair-Wilson: I am grateful to you, Mr. Deputy Speaker, for allowing time for this
Adjournment debate even at this late hour.
On a point of order, Mr. Deputy Speaker. The Minister who is to answer the debate does not appear to be in his place.

Mr. Deputy Speaker (Mr. George Thomas): That is not a matter for me.

Mr. McNair-Wilson: I shall proceed with my speech, although it is difficult to know how the Minister will be able to reply to it, as he is not present.
At a time like this, when so many problems are besetting our nation, it may seem to some that the question where a county's boundary is drawn is not a matter on which I should delay the House, yet I believe that one of Parliament's functions is to right wrongs, no matter how great or how small, and that as the county boundary is now drawn between Berkshire and Oxfordshire a wrong has been committed.
Tonight I shall ask the Minister—who is now present—to reconsider the decision of the boundary commissioners, who ruled four important monuments out of Berkshire and in what we in Berkshire describe as "New Oxfordshire". I seek the return of the White Horse to Berkshire.
I ask the Minister to agree that the boundary line shall be redrawn in such a


way that the White Horse and three other monuments that have been within Berkshire for a thousand years shall once again be within the royal county. The monuments to which I refer, apart from the White Horse, are part of the Ridgeway, Dragon Hill, Wayland Smith's Cave, and the Blowing Stone. All these monuments lie within an area of 3½ square miles and are about three miles from the county boundary, which came into existence on 1st April. In other words, a boundary change which would encompass about 10 square miles of the new county of Oxfordshire would satisfy the desires of my constituents and of many people living throughout Berkshire.
It may be wondered why the change of a county line matters so much, why more than 10,000 people signed a petition which was presented to Her Majesty the Queen at Windsor Castle in June, or why the well-known archaeologist, Miss Jacquetta Hawkes—the wife of J. B. Priestley, the novelist—should have written in The Times recently, about the boundary commissioners' decision to leave the White Horse out of Berkshire:
This disregard of people's feelings and the power of symbols to give meaning and identity is slowly destroying us.
It is because Berkshire and the White Horse have had a relationship which has gone back more than a thousand years. After a thousand years each of us should wonder whether this is the moment to turn his back on the history of an important part of our country.
I admit that the White Horse is far older than the county boundary of Berkshire as it was up to 1st April. The White Horse symbol is thought to have been cut perhaps 2,000 years ago by a British tribe, the Atrebates. It so happened that their territory corresponded to what was the old County of Berkshire, so perhaps when they cut that rough design on the down-land they were setting a seal upon an area which until 1st April was the Royal County of Berkshire.
Nearby is a hill, called Dragon Hill. By popular myth or history—have it as you will—it is believed that on that hill St. George slew the dragon. If one doubts this, one should look at the hill and see the marks on the chalk where the dragon's blood ran down and where, even to this day, no grass will grow. Close by is

Wayland Smith's Cave, which has been described as the most legendary long barrow in England and which featured in Sir Walter Scott's great novel, "Kenilworth".
These are some of the historical monuments of this small area which once were in the county and which now are excluded. Over them, standing as it has always stood, is the Ridgeway, the path that cuts across the centre of England and has been a route of commerce for so many centuries that no one really knows when it first started. It, too, was in the county of Berkshire and it, too, was excluded by the Boundary Commission's decision.
These, then, are the treasures which once were Berkshire's, and always there is the White Horse. Once—until this year—the White Horse was a symbol of the county's coat of arms. It is still part of Hungerford's coat of arms. It was the cap badge of the Berkshire Yeomanry in two world wars. The headstones of the members of that regiment, whose bodies lie in this country and abroad bear the White Horse symbol to show where they came from, and the regiment to which they belonged. It is the badge even to this day of the Berkshire Signals Squadron of the Territorial Army. It is the emblem of the Berkshire Federation of Women's Institutes. It is the badge of one of the halls of Reading University. It is the trade mark of local companies, in particular, one company which sells widely overseas—Lambourn Engineering.
Yet the White Horse—and the symbols of the White Horse in each of the ways I have described—is no longer Berkshire's. It belongs to Oxfordshire. All those people who once believed that it was part of the county's traditions now have to dismiss it from their thoughts, and they wonder why this has to be—why the stroke of a civil servant's pen can end 1,000 years of history, and of historical connection. For anyone who cares about tradition, this is a tragedy, and something which must make us all wonder how a boundary change—a line on a map—can be drawn so arbitrarily as to end so many historical links.
Nor are the arguments against changing the boundary really worth more than a cursory glance. Since I took up the cudgels to have the White Horse returned


to Berkshire, I have received 105 letters and postcards, mainly from people living in and around Uffington, telling me they would prefer the White Horse to stay in their parish. I set this against the 10,000 names on the petition, and this shows clearly that the argument is overwhelmingly in favour of the people of Berkshire.
Of course, I admit the link between the White Horse and Uffington, and, as we are told so often in our history books, how they scoured the chalk and kept the horse in order. I feel for them, that they, too, should have been taken out of the royal county, but that is no reason to deprive the county of its traditional symbol.
Uffington, I suppose, must stay in Oxfordshire, but I want the White Horse back in Berkshire. Since when have parish boundaries—the boundaries which the people of Uffington claim embrace the White Horse, and so make it theirs rather than Berkshire's—taken precedence over county boundaries? Here, surely, is a case where the parish boundary might encompass the White Horse and the county boundary of Berkshire do the same? There are no more than perhaps 20 people involved in what I am talking about as a boundary change. It is a line on a map, something that will give back to Berkshire a thing that matters so much to her.
To those who have argued "Why should Berkshire care about the White Horse? Although it stands high on the Berkshire downland, nobody in Berkshire can see it, but only the people below in Oxfordshire as they look up", I reply that if that argument is to have any validity we should give the White Cliffs of Dover to the French—the only people who can see them. Which hon. Member would stand by such an argument? It is palpable nonsense. Our White Horse, standing on our downland, reminds all the people below that they are coming to the royal county of Berkshire, and they had better look to their laurels before crossing our county boundary. At least, that was the position before 1st April, but, alas, is no more.
Some people are undoubtedly intoxicated by the effectiveness of a certain whisky advertisement, which tells us that we can

take a White Horse anywhere. To them I retort, "You can't take the White Horse from Berkshire. You may draw your line for the moment so that it is not in the county, but the traditions are there; the headstones lie in foreign fields the coats of arms are there for all to see."
I appeal to the Minister to do justice to the royal county by—in Miss Jacquetta Hawke's words—restoring
the White Horse and the chalk beneath its hooves to their original owners.
I urge the Minister to say that he will lend the weight of his Department to ask the Boundary Commission to bring forward its review of Berkshire's boundaries from 1979 to the present day, and to remember the 10,000 names on the petition, and the tiny opposition that I have received.
If my words have failed to persuade the hon. Gentleman that he should lend the weight of his Department to that, may I ask him to consider the possibility of a referendum in the counties of Berkshire and Oxfordshire to decide where the White Horse should be. I promise him that if we have such a referendum, we in Berkshire will not fight whatever decision the people make, for we believe that the people want the White Horse back in the royal county of Berkshire.

11.59 p.m.

Mr. Airey Neave: As the White Horse is in my constituency, I am grateful to have a few minutes to say something about the position of my constituents in the matter.
My hon. Friend the Member for Newbury (Mr. McNair-Wilson) has made a most eloquent plea for the return of the White Horse to Berkshire. I should like to put one or two points about that plea. First, affection for the White Horse is not confined to the county of Berkshire. Many people revere this ancient monument. I live quite close to it, and I know the feelings of my constituents about the matter. There is no tiny opposition to the restoration of the White Horse to new Berkshire.
The campaign to keep the White Horse in Berkshire did not begin until after thepassing of the Local Government Act. There was hardly a clause or schedule in that Bill which was not contested hotly and scrutinised by hon. Members. That


was not so in this case. No representations were ever made to the Local Government Boundary Commission about it.
As we know, the campaign has continued since. But the Vale of White Horse District Council has only just been set up and has only just started work. To divorce the White Horse from the new district which bears its name would seem to be absurd. I make no criticism of my hon. Friend, but it is rather extraordinary that since the boundary changes took effect, neither the Vale of White Horse District Council nor the Oxfordshire County Council has been consulted by those responsible for this agitation.
Since ancient times, this monument has been in the parish of Uffington. No doubt the Local Government Boundary Commission, realising that the limits of that parish were 1½ miles south of White Horse Hill, framed its recommendations on that basis.
Unfortunately for my hon. Friend's eloquent argument, the Vale of White Horse district is on the north side of the hill, invisible from the new Berkshire and dominating the vale itself. It would be wrong, in those circumstances, to alter the ancient parish boundaries either of Uffington or in relation to the other monuments my hon. Friend mentioned—the Blowing Stone and Wayland Smith's Smithy. It is the people of Uffington who scoured the White Horse, which has no connection with Lambourn parish, and the White Horse is only a mile from the village of Uffington itself.
Then there is the effect on the Vale of White Horse and the new district council. Since April, it has been settling down to its work, and it has been irritated, to say the least, by the suggestion that the White Horse should be removed from it as it forms an integral part of the vale from which it takes its title. It has been known that the reorganisation has been proceeding for two and a half years.
All boundary changes arouse controversy, and I have had many representations in opposite terms to those received by my hon. Friend. Many of my constituents wished to remain in Berkshire. There was considerable feeling about it. But I have heard from all political parties—Abingdon Labour Party, the Liberal Association and my

own party. All have written strongly supporting what I have been saying. So have most of the parish councils in the Ridgeway area, and a mass of my constituents have written to me. I have had only two letters supporting my hon. Friend's point of view.
Many people feel with me that this famous and much admired memorial is not owned by Berkshire or Oxfordshire. It does not belong to counties, and it should not be the subject of boundary disputes. It belongs to the nation, and it is in the care of the Secretary of State for the Environment. I made this point in a letter to The Times in reply to Miss Jacquetta Hawkes. Everyone has access to the White Horse, and it is the property of the nation.
In reply to the debate, I hope that the Under-Secretary will support the decisions of the Boundary Commission and the views of my constituents.

12.4 a.m.

The Under-Secretary of State for the Environment (Mr. Gordon Oakes): I am grateful to both the hon. Member for Newbury (Mr. McNair-Wilson) and the hon. Member for Abingdon (Mr. Neave) for their contributions, which have displayed the eloquent force of the arguments with regard to both counties over this unique archæological feature of the British Isles which is obviously held dear by both counties.
We know from the advertisement to which reference has been made that "You can take a White Horse anywhere". The hon. Member for Newbury refutes that argument by saying that this White Horse cannot be taken anywhere.
As the hon. Member for Abingdon said, the Local Government Bill of 1972 was one of the most fiercely debated and contested Bills ever to come before this House. Never once—during Second Reading, in Committee, lasting day and night, on Report, again lasting day and night—was the question of the boundaries of Berkshire and Oxfordshire debated in relation to the White Horse. It is true that the people in this part of Berkshire are not objecting to the fact that they have been transferred to the county of Oxfordshire. It is the county symbol, as the hon. Member describes it, which finds itself across the boundary in another county.
The hon. Member for Abingdon pointed out with force that the monument faces north. It is approached by roads from the north and significantly gives its name to that part of Oxfordshire which it overlooks. It is a most charming name for the district—the Vale of White Horse. That is the district in which it is now situated.
All the signs, for a considerable time, have been that the parish has maintained this horse. It is referred to as the Uffington Horse. I do not think that is a fair description, because this horse has far more than a parish, county or, indeed, national significance. I appear tonight as the Minister concerned with local government, and as the groom—because the Department of the Environment has, since 1856, been responsible for the scouring of the White Horse. This is a charming ceremony, which went on originally from the parish of Uffington. Every year there was an annual scouring fair, when the horse was scoured, its boundaries maintained in pristine whiteness, and cheeses were rolled down the Manger sides for the villagers to eat. That was a charming British ceremony.
Now it is not so glamorous. The useful and essential work is carried on by the Department's Ancient Monuments section. The White Horse still remains a magnificent figure on the landscape for the people of the area and the country to enjoy.

Mr. McNair-Wilson: The Minister used the expression "a charming British custom". I think he has the wrong words. Surely he meant "a charming Berkshire custom".

Mr. Oakes: I did not mean a charming Berkshire custom. I am sorry to disappoint the hon. Gentleman. One of the hon. Gentleman's supporters is the Poet Laureate, who wrote in support of this horse's remaining in the Royal County of Berkshire. I refer the hon. Gentleman and the Poet Laureate to some lines by G. K. Chesterton about this horse:
Before the gods that made the gods
Had seen their sunrise pass
The white horse of the White Horse Vale
Was cut out of the grass".
The White Horse was cut out 2,000 years ago. It was maintained long before the parish came into existence. It was probably maintained even during

Roman times. It is truly an ancient British monument.
I can understand the feeling in Berkshire about this monument because of its symbolic significance. Many hon. Members who may not have had quite so symbolic or ancient a monument in their constituencies as the White Horse had to part company with things which were dear to their hearts as a result of the Local Government Act 1972. They found that they were in a different county, with different traditions, in different company. Most of them are now—some reluctantly—learning to adapt to their new county.
We, as a Government did not fully support all that was behind the Local Government Act 1972. As a Government we are indeed reluctant to disturb the whole pattern of that measure because of the trauma that local government suffered. We have no objection to this boundary adjustment. Indeed, the Redcliffe-Maud Committee supported the idea that this part or Berkshire should go into Oxfordshire. It did not refer to the White Horse. It accepted that this part of the county of Berkshire should go into Oxfordshire. We in the Opposition concurred, and the then Government concurred. Not one voice was raised in this House against the proposal, neither on behalf of people of the parish nor in respect of the symbol. There are few areas, few boundaries, few parish boundaries that one can say that about in respect of the passage of the Local Government Act.
Both hon. Gentlemen lay claim to the horse. The horse looks to the north. The Boundary Commission will deal with this matter in 1984—because this is a country boundary matter—10 years from the coming into operation of the Act. That commission will be open to receive representations from both hon. Gentlemen. I hope that both hon. Gentlemen will be here in 1984 to make those representations, and that their constituents, likewise, will make representations to the commission. The commission will decide between the two on the question of the county boundary.
I accept the hon. Gentleman's argument that few people are involved in this matter. This is downland, in a most attractive area—both physically and archeologically—in the county.
I endorse what the hon. Member for Abingdon said, both in his speech tonight and in his letter. This treasured ancient monument is not the property of the county of Berkshire; it is not the property of the county of Oxfordshire; it is not the property of the country of England. It has been there for 2,000 years. Before the Romans came the White Horse was in the hills—a symbol similar to that on the coins which existed in Grecian times. This is not a county matter, a parish matter or even a country matter. It is not a Berkshire symbol, an Oxfordshire symbol or an English symbol. You, Mr. Deputy Speaker, will

appreciate that it belongs to us all. This is a British monument and symbol.
I hope that the hon. Gentleman, having heard the reply to the debate, will realise that the treasure that Berkshire has given up has been given to the British nation. The treasure that Oxfordshire now has is a trust on behalf of the whole British nation—indeed, of the civilised Western world.

Question put and agreed to.

Adjourned accordingly at fourteen minutes past Twelve o'clock.